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Raising Interest Rates: IOER vs. OMO: Interest on Excess Reserves vs Open Market Operations

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  • William H. Carlson
  • Conway L. Lackman

Abstract

We demonstrate that IOER should make the excess reserves even larger, continuing the problem of monetary policy control and rewarding the banks for their policy errors fostering the Great Recession by giving them risk free returns on the $2.5 trillion of idle funds that are benefiting no one except the banks themselves, or having the banks invest those idle funds in some useful manner such as helping finance the government deficit and fix our roads and bridges. The number 1 priority should be to get rid of the troublesome excess reserves and utilizing open market operations (OMO).

Suggested Citation

  • William H. Carlson & Conway L. Lackman, 2018. "Raising Interest Rates: IOER vs. OMO: Interest on Excess Reserves vs Open Market Operations," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 9(1), pages 142-146, January.
    • Handle: RePEc:jfr:ijfr11:v:9:y:2018:i:1:p:142-146
    DOI: 10.5430/ijfr.v9n1p142
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    Keywords

    monetary policy; banking policy;

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