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Monday, October 06, 2008

Fed to Begin Paying Interest on Reserves, Expands Loan Program

by Calculated Risk on 10/06/2008 08:22:00 AM

From the Fed: Board announces that it will begin to pay interest on depository institutions required and excess reserve balances

The Federal Reserve Board on Monday announced that it will begin to pay interest on depository institutions' required and excess reserve balances.
The Financial Services Regulatory Relief Act of 2006 originally authorized the Federal Reserve to begin paying interest on balances held by or on behalf of depository institutions beginning October 1, 2011. The recently enacted Emergency Economic Stabilization Act of 2008 accelerated the effective date to October 1, 2008.
Substantial Further Increases in Term Auction Facility Auctions
The sizes of both 28-day and 84-day Term Auction Facility (TAF) auctions will be boosted to $150 billion each, effective with the 84-day auction to be conducted Monday.