Bangladesh—2009 Article IV Consultation: Preliminary Conclusions of the IMF Mission Oct 31, 2009
This caused reserve money growth to accelerate to 32 percent in June 2009; banks excess reserves rose sharply and short-term interest rates declined below 1 percent ... Banks excess reserves have come down to Tk 55 billion, from Tk 100 billion at end-June, despite the continued strong net inflow of foreign exchange ... BB aims to gradually bring excess reserves down further. (IMF News)
Central banking cryptology Oct 31, 2009
What is harder is understanding what changes in the way central banks use monetary policy tools from excess reserves to reverse repos actually mean. And, from the perspective of the Federal Reserve, and other central banks, sending signals through actions rather than words is particularly dangerous if few people understand them. (FT.com -- Markets)
Government Porkfare Is No Way to End Recession Oct 27, 2009
Until banks stop hoarding excess reserves and start lending -- theyre buying but not making many -- the spread is an incentive waiting to happen. Like all incentives, this one will work in time. (Bloomberg -- Columnists)
BBVA economist: Recovery depends on Asia Oct 21, 2009
He said a decrease in excess reserves will signal restoration of credit markets. Most Read Stories. (Tampa Bay Business Journal, FL)
Stocks Push Higher Oct 20, 2009
Bernanke said the financial regulatory system was overwhelmed by capital flows and did not manage them well, while the best way to manage countries holding excess reserves was dealing with global imbalances. A Barron's piece over the weekend that said the Fed should start raising rates and reducing accommodation created some buzz in credit markets Monday. (BusinessWeek)
Cost of Freedom Recap Oct 14, 2009
Sixty-three percent of the excess reserves in the world are U.S. dollars. I'm still very optimistic. (Fox News)
Fed Said to Consider Clearing Banks, Facility to Drain Reserves With Repos Oct 11, 2009
They will one day need to do the reverse repos to sop up at least some of the $800 billion in excess reserves. Theyll clearly want to make sure the mechanism works right. (Bloomberg)
US Fed to tighten policy when outlook improves Oct 9, 2009
AFP - Friday, October 9. Federal Reserve chief Ben Bernanke signaled he was in no hurry to tighten monetary policy, saying action will be taken when the US economic outlook has "improved sufficiently.". (Yahoo! Asia News)
Bernanke works onas jobless tally mounts Oct 8, 2009
Most strikingly, the US banks have been overloaded with excess reserves that rose from nothing a year ago to US$855 billion in September 2009. There has been no public analysis of excess reserves, their origins, and their bearing on unemployment ... Why have banks not been able to place these excess reserves. (Asia Times Online)
Experts Talk Stocks, the Economy, and the Fed's Next Move Sep 25, 2009
However, the Fed's extraordinary asset purchase program has resulted, so far, in $800 billion of excess reserves in the banking system. Andrew Tilton, Goldman SachsThe financial crisis and deep U.S. recession have prompted concerns about a sustained reduction in the economy's growth potential (the growth rate of potential supply, rather than demand), perhaps to as low as 2% per year. (BusinessWeek)
Why dropping interest rates may help create a new bubble Sep 25, 2009
4 trillion) balance sheet and sop up the $US823 billion of excess reserves banks are holding without fanning inflation. After repeated bubbles and busts over the past two decades, policy makers have to be concerned about the effect of an overnight rate that sits close to zero right now. (Sydney Morning Herald -- Business)
Fed's Kohn Says No Exit for Extended Period Sep 11, 2009
Critics say the doubling in size of the Fed's balance sheet to around $2 trillion since last September will lead to higher consumer prices when growth picks up and banks begin to lend out these excess reserves, fueling another credit bubble. But the Fed argues that its ability to pay interest on reserves will break this linkage. (ABC News -- Wire)
Negative rates? Sep 10, 2009
He says that while formally the deposit facility has a negative rate, in practice the Swedish central bank uses other methods to take care of banks' excess reserves and the deposit facility is not actively used ... Currently, commercial banks are forced to keep a certain proportion of their funds with the Bank - known as its excess reserves - on which the central bank pays 0. (BBC News -- UK)
Central bankers stuck in a hole Sep 1, 2009
US banks have never piled up as much excess reserves in their history as they have since September 2008. Their excess reserves were less than $2 billion, but stood at $708 billion in August 2009, indicating that banks had no safe and productive outlets for this money. (Asia Times Online)
Fed Signals Vote of Confidence in Economy Aug 13, 2009
Bernanke has increased excess reserves in the banking system by $800 billion, but lending is still slow. The banks are hoarding capital in order to deal with the losses from toxic assets, non performing loans, and a $3. (CBS News)
Public Information Notice: IMF Executive Board Concludes 2009 Article IV Consultation with Sweden Aug 8, 2009
A decisive relaxation of the monetary policy stance led by a reduction in the policy rate to percent has recently been complemented by the imposition of a penalty on banks excess reserves at the Riksbank s deposit facility. On the fiscal side, full operation of large automatic stabilizers and a discretionary budget loosening for 2009 is underway taking the budget from a surplus of 2 percent in 2008 to a deficit of 4 percent in 2009. (IMF News)
Morning in America Means `Long Slog' as Nobel Winner Phelps Eyes Recovery Aug 4, 2009
Hundreds of billions of dollars in so-called excess reserves that banks have on deposit at the Fed give lenders fuel to extend lending. Beckers Worry. (Bloomberg)
No escape for Fed Jul 30, 2009
US banks hold more than $800 billion in excess reserves. This is a clear indication that the prime market has no ability to absorb unlimited credit and the only outlet is the subprime market. (Asia Times Online)
Unusual times call for Bernanke measures Jul 26, 2009
Banks are currently holding $744bn of excess reserves, the result of the Fed stuffing them into the banking system to pay for asset purchases. The whole point in emphasising exit strategies, according to the ISI Group's Tom Gallagher and Andy Laperriere, is to keep inflation expectations anchored. (Business Report, South Africa)
2 comments Jul 25, 2009
These "excess reserves" are way more than the banks need to keep at the Federal Reserve ... I find it very interesting that these so-called excess reserves are already coming down ... My hope is that Bernanke & Co. actually uses the excess reserves as a policy variable, rather than as something to be manipulated by the interest charged for those reserves. (Human Events Online)
Is Bernanke Wise Enough to Exit? Jul 23, 2009
These excess reserves are way more than the banks need to keep at the Federal Reserve ... I find it very interesting that these so-called excess reserves are already coming down. (Townhall.com)
Lockhart: No Imminent Change in Fed Policies Jul 21, 2009
Lockhart said the ability of the Fed to pay interest on excess reserves held with the U.S. central bank, granted by Congress during the crisis, would inhibit the transmission of this additional liquidity into higher prices. "One should not assume at this point that extraordinary measures to shrink the balance sheet are required to contain inflationary pressures," Lockhart said. (Newsmax)
Bernanke May Hold Rates Down by Showing He Can `Forcefully' Reverse Course Jul 20, 2009
Excess reserves -- money available for lending that banks choose to leave with the Fed instead -- averaged $743 ... A possible way to counteract that would be by establishing term deposits at the central bank, where excess reserves could be parked for extended periods, rather than just overnight, Crandall said. (Bloomberg -- US)
Super Group sells insurer to Santam Jul 13, 2009
The purchase consideration would be increased by a portion of the profits on the release of excess reserves as at the effective date. - I-Net Bridge. (Business Report, South Africa)
Bernanke May Explain Exit Strategy From Fed's Biggest Monetary Expansion Jul 13, 2009
While the Treasury has a program of short-term bill sales to help sterilize excess reserves, it complicates the departments regular borrowing to finance government spending. I am not worried at all that the Federal Reserves balance-sheet expansion will generate an inflation problem, New York Fed President said in a speech in Nashville on April 18. (Bloomberg)
June Jobs Tell a Bad Story Jul 4, 2009
Until these excess reserves come way down, the impact of the Feds monetary stimulus will be more muted than has traditionally been the case in Milton Freidmans monetarist model. . (Townhall.com)
Banks and Consumers: Joined at Jul 3, 2009
While the Fed has provided cash to banks through direct and indirect lending, those funds seem to rather quickly end right back up at the Fed in the form of excess reserves of banks, not being spent. For the economy to start a real recovery though, someone has to blink. (Fox News)
The lessons of 1937 Jun 22, 2009
Monetary policymakers feared these excess reserves would make it difficult to tighten if inflation developed or if speculative excess began again on Wall Street. In July 1936 the Fed s board of governors stated that existing excess reserves could create an injurious credit expansion and that it had decided to lock up those excess reserves as a measure of prevention ... Unfortunately it turned out that banks, still nervous after the financial panics of the early 1930s, wanted to hold excess... (The Economist)
Welcome to the G-8world of illusion Jun 19, 2009
Consequently, the reserves of the US banking system rose from $45 billion in May 2008 to $933 billion in May 2009, an incredible multiple of 21, while the banking system's level of excess reserves went up by an even larger multiple, from $2 billion to $877 billion in May 2009. Banks are in a position to initiate unlimited credit expansion given such mountainous level of reserves. (Asia Times Online)
2009 Article IV Consultation with the United States of America, Concluding Statement of the IMF Mission Jun 16, 2009
In this connection, existing instruments including remuneration on excess reserves, and traditional reverse repo operations can usefully be supplemented by reverse repo operations in agency and mortgage-backed securities, use of the Supplementary Financing Program (which may require a corresponding adjustment of the federal debt ceiling) or, if necessary, issuance of Fed paper (which will require Congressional authorization). In addition, and as anticipated in the March joint statement with... (IMF News)
An exit for the central banks? This way out Jun 5, 2009
Many analysts see these excess reserves as a pool of inflationary fuel just waiting for the match of credit demand ... It sees excess reserves as a problem only if they overwhelm its ability to raise the federal funds rate when need arises ... Banks should not lend excess reserves at, say, 1%, if they can earn 2% from the Fed. (The Economist)
More of this story Jun 4, 2009
The district will use stimulus money and excess reserves to fund the cost of the project. Opened the bids received from A.T. Klemens ( 107,000) and Treasure State Roofing ( 98,752) for the middle school/high school roof project. (Cut Bank Pioneer Press - Golden Triangle, MT)
Inflation: Coming To A Dollar Near You? May 23, 2009
U.S. banks have an enormous amount of excess reserves, according to Federal Reserve , that would rapidly expand the money supply once lent out. "The enormous increase in reserves is potentially inflationary," Stanford economics professor the U.S. Congress in February. (CBS News)
Bill Miller Doubles Down on Financials May 15, 2009
Banks, in fact, are flush with cash, have deposits flowing in, and have $800 billion of excess reserves on deposit at the Fed, he writes in his quarterly note to investors. Most of the big banks that have reported results recently are profitable (Wells Fargo had. (Newsmax)
* FSC suggests excess reserve plan May 9, 2009
The government should offer more incentives to attract bank excess reserves worth more than NT$4 trillion (US$121 ... Taiwan could offer incentives such as convenient capital transfer and tax preferences to attract domestic and foreign investment in local capital markets, especially banks holding more than NT$4 trillion in excess reserves, Yeh said. (Taipei Times, Taiwan -- World)
* Short and long-term solutions May 8, 2009
In the US and the UK, the central banks feel that they have the ability to exit, with a new financing program in the US to issue new Treasury securities and drain excess reserves, and the Bank of England sucking out excess liquidity by selling assets it has bought or by issuing new bank bills. Across the emerging world, inflation risk needs to be assessed case by case, although in many countries it is not an immediate problem. (Taipei Times, Taiwan -- World)
An inevitable blast May 7, 2009
Mr Murphy correctly asks, "How does this avert the threat of hyperinflation?" The answer is, "Simple, according to Woodward and Hall. If banks ever start loaning out too much of their (now massive) excess reserves, and thereby start causing large price inflation, then the Fed can simply raise the interest rate it pays on reserves. Banks would then find it more profitable to lend to the Fed, as it were, rather than lending reserves out to homebuyers and other borrowers in the private sector.... (Asia Times Online)
The mirage of recovery May 5, 2009
His massive liquidity injection translated into a mountainous buildup of banks' holding of excess reserves that reached $862 billion as of end-April 2009 against less than $2 billion prior to September 2008 ... Moreover, the Fed is paying an interest on excess reserves held by banks following massive liquidity injection. (Asia Times Online)
Output gap theory is squishy concept for Fed to lean on Apr 20, 2009
Or else it's a squishy construct to hang your hat on if you're Fed chairman Ben Bernanke looking at a $2 trillion (R18 trillion) federal deficit and $804 billion of excess reserves. Caroline Baum is a Bloomberg News columnist. (Business Report, South Africa)
American Principle Bank Announces: First Quarter 2009 Financial Results; Achievement of Profitability; Total Assets Exceed $175 Million Apr 18, 2009
the Bank's maintaining excess reserves at the Federal Reserve Bank as a higher yielding alternative to overnight federal funds sold; and. the Bank's building additional liquidity at the end of March 2009 in anticipation of deposit withdrawals associated with client income and property tax payments during April. (PR Newswire)
'Money Wars' at the G-20 Apr 13, 2009
The economic power of these rising nations began with their central banks purchasing excess reserves of Dollars and Euros and, later, US and European debt. More recently, many countries have established new financial vehicles called Sovereign Wealth Funds to make direct investments in global companies and industries, thereby extending their nation s financial influence. (Human Events Online)
Sooner or Later, Inflation Apr 3, 2009
Shedlock argues that as long as the banks aren t lending, we won t see inflation, and Polleit notes that they have indeed massively increased their excess reserves (from $1. 9 billion to $798. (The American Conservative)
Philip Bowring: Credit for those who need it most Mar 11, 2009
The ideal way to address this issue might be for countries with excess reserves to lend the IMF, World Bank and other multilateral lenders $750 billion - a modest sum by Western bailout standards - enabling these institutions to provide both short-term stabilization funds and longer-term investment ... Most excess reserves are in Asia and the oil bloc, and the Asians are tempted to help their neighbors rather than the wider world. (International Herald Tribune -- Ed/Op)
* [BUSINESS BRIEFS] Mar 10, 2009
A currency cannot depreciate and appreciate at the same time, Perng said, adding that the nations monetary policy was loose enough, as illustrated by the significant excess reserves. Perng also denied reports that he fought against the use of foreign exchange reserves to finance public construction projects, insisting that any proposal to touch the reserves must have a legal basis. (Taipei Times, Taiwan -- World Business)
Now for something different Mar 6, 2009
The initial increase in deposits could be multiplied several times as banks find themselves with excess reserves, which they lend in successive rounds, producing yet more deposits and further loans. But this account assumes that banks are keen to extend credit and are being held back only by insufficient reserves. (The Economist)
St. Louis Fed Analysis: Will the Expansion of the Monetary Base Lead to Inflation? Mar 4, 2009
Normally, this scenario would lead to a sharp rise in inflation, but a combination of factors including the recession, the Fed's payment of interest on excess reserves, and distress in financial markets has kept inflation at bay ... The third type, "excess reserves," accounts for the doubling of the base and is directly related to the Fed's programs created or expanded to help the financial markets. (PR Newswire)
Fix the financial crisis - for free Feb 24, 2009
Instead of addressing the real issues, excess reserves - the amount banks could loan but have not - have climbed astronomically, from $2 billion in January 2008 to over $800 billion in January 2009. We do not face a crisis of liquidity: banks have plenty of money to loan. (San Francisco Chronicle -- Opinion)
Fed Signals Determination to Avert Price Surge From Stimulus, Money Supply Feb 19, 2009
Most banks are leaving the great bulk of excess reserves idle, primarily by keeping the funds on deposit with the Fed, he said. We expect inflation to be quite low for some time, Bernanke said in the speech. (Bloomberg)
Bad bank - insanity bank Feb 11, 2009
Excess reserves of depository institutions rose from $1. 8 billion on December 31, 2007 to $843. (Asia Times Online)
