FED Fears Interest Payout Upon QEfinity Exit

A large percentage of these banks are foreign-owned. They saw this coming and decided to store reserves with the FED, so they could make money as we lose it. Brilliant plan, Ben.


US Federal Reserve officials fear a backlash from paying billions of dollars to commercial banks when the time comes to raise interest rates.

The growth of the Fed’s balance sheet means it could pay $50bn-$75bn a year in interest on bank reserves at the same time as it makes losses and has to stop sending money to the Treasury.

Officials at the US central bank fear it could create a public-relations nightmare after the Fed was lambasted for rescuing banks during the financial crisis. It is one factor prompting some inside the Fed to reconsider the eventual “exit strategy” from easy monetary policy.


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2 Responses to FED Fears Interest Payout Upon QEfinity Exit

  1. Jim22 says:

    What’s the big deal? The Fed could just default couldn’t they?

    Who would stop them?

  2. notamobster says:

    It’s not a ton of money for them. It’s just a PR nightmare. It looks bad.