The textbook I’m reading says that the reserve ratio is like the biggest “tool” that the fed has. They are increasing interest rates, but then they are having the reserve ratio at 0% and they are engaging in reverse repo to make sure that banks have plenty of cash. I don’t get it.
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Your textbook is old and out of date. The reserve ratio has been abandoned as a monetary tool and instead we are using an ample reserves regime.
TLDR we pay banks on their cash instead of requiring them to maintain reserves
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