Unformatted text preview: reserves. Excessive reserves are the fed fund rate. When commercial banks make loans they create money. When loans are repaid money is destroyed unless they are immediately put back out. When commercial banks make loans they buy securities from the public because they are adding money to someone’s checking account. PG 247 requirements of types of deposits. No current requirement....
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- Spring '08
- Monetary Policy, Federal Reserve System, reserve requirement