In the latest Fed minutes, it is increasingly likely that the interest rate will be lifted in December this year. This will have a profound effect on the money supply in the US economy. Since 2008, the Fed has engaged in several quantitative easing programs by swapping bank securities with interest-bearing reserves. This led to a dramatic increase in excess reserves held by banks. These are additional (excess) cash or deposits with the Fed that banks hold beyond the requirements by the Fed.

Changing the monetary policy  will have significant effects on money supply and overall economy.


Who is Holding All the Excess Reserves