why does the fed pay interest to banks?\no it is interest on money held in reserve.\no it is interest on…
why does the fed pay interest to banks?\no it is interest on money held in reserve.\no it is interest on credit available to the fed.\no it is interest on loans taken by the fed.\no it is interest on government investments.
Answer
Brief Explanations:
The Federal Reserve pays interest to banks on the money they hold in reserve. This is a tool to influence monetary policy and bank - lending behavior. Banks are required to hold a certain amount of reserves, and paying interest on these reserves gives the Fed more control over the money supply and short - term interest rates.
Answer:
It is interest on money held in reserve.