Reserve Ratios and Maintenance Periods

This article is a follow up to titled Reserve Ratios and Excess Reserves Interest a long article written in 2017. Much was written on Maintenance periods. I wrote a long article for the ECB’s Money Market Institute in 2012 on Maintenance Periods and Reserve Ratios.

Interesting aspect is not much changed since 2012 and not much changed since the Garn St Germain act of 1982.

Note how the 6 week Economic releases align to Maintenance periods. The purpose to the following is MMT. Modern Monetary Theory. Its more than a theory and well practiced.

Bank Maintenance periods = 35 days.

7 Day Maintenance Periods = 14 Calendar days. Begins Thursday and ends the 2nd Wednesday. Believe this explains the 2 week cycle.

Interest credited = 1 day after the maintenance period.

Interest Paid as primary credit = 5%, secondary = 5.50.

Today’s reserve balance rate 5.40

Interest on Required Reserves = 4.9%, factored as 4.9 X total bank balance.

Reserve Requirement Exemption = 361.1 million.

Low = 691.7.

Fed Funds rate = 5.33.

Fed Funds rate held at 5.33 since last raise through daily money channels. Ensures Fed Funds won’t trade to zero.

Purchase and sale of Bonds = Debit and Credit to Treasury and Fed Accounts. This holds Fed Funds and money supply constant.

Brian Twomey

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