Explore BrainMass

Explore BrainMass

    Fed Funds Market

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Explain why the Fed must normally add reserves to the banking system via open market operations on most days in order to maintain its interest rate target in the Fed Funds market.

    © BrainMass Inc. brainmass.com November 24, 2022, 11:45 am ad1c9bdddf

    Solution Preview

    Fed Funds Market

    Every bank must hold enough reserves at the Fed to cover its depositors' checks, and enough vault cash to meet the demand for withdrawals by depositors. These reserves are normally met by an active interbank market in which banks lend or borrow reserves among themselves. The interest rate on ...

    Solution Summary

    Fed Funds Market is assessed in 200 words.