Due to the three percent reserve requirement elimination on non-transaction accounts at the end of 1990, it has roughly reduced the level of required reserve balances. Using the seven percent rate for federal funds as a proxy for the interest that could have been earned on these balances, the said cut in the reserve requirements had led to an increase of approximately $800 million in the yearly, pretax earnings of customers and their depositories.
Almost the 2,500 depositories with vault cash that had been insufficient back then in meeting their reserve requirements were no longer bound to hold balances at the Federal Reserve that is brought upon by the cut in reserve requirements. For the said institutions, the reduction in the non-transaction
Almost the 2,500 depositories with vault cash that had been insufficient back then in meeting their reserve requirements were no longer bound to hold balances at the Federal Reserve that is brought upon by the cut in reserve requirements. For the said institutions, the reduction in the non-transaction