why does the fed pay interest to banks? it is interest on money held in reserve. it is interest on credit…
why does the fed pay interest to banks? it is interest on money held in reserve. it is interest on credit available to the fed. it is interest on loans taken by the fed. it is interest on government investments.
Answer
Brief Explanations:
The Federal Reserve (Fed) pays interest to banks on the money they hold in reserve. This is a tool for monetary - policy management. By paying interest on reserves, the Fed can influence banks' lending and reserve - holding behavior, and help control the money supply and interest rates in the economy.
Answer:
It is interest on money held in reserve.