Draining reserves

(redirected from Draining Reserve)

Draining reserves

Federal Reserve System's course of action to tighten the money supply by (1) raising a bank's minimum reserve requirements, (2) selling bonds in the open market, (3) raising the rate at which banks borrow from the Fed, or (4) through draw-downs.

Draining Reserves

The practice of a central bank reducing the money supply. Examples of draining reserves include selling Treasury securities (or the equivalent in different countries), raising interest rates at which banks borrow from the central bank or from each other, and increasing banks' reserve requirements. All these measures are designed to reduce the amount of money in circulation in order to combat inflation.
References in periodicals archive ?
McCarthy also said even if the ballot measure passes, the sales tax increase won't completely fix the deficit problem; it would only slow down the bleeding and stop draining reserve funds so quickly.
When it does so, it debits the Federal Reserve account of the depository institution receiving the currency, thus draining reserve balances from the depository system.
On the monetary front, however, they warned that if the Bank of England begins to raise interest rates without rst draining reserves then they may nd that broad market rates are not as responsive to policy changes as would be hoped - an issue which could create uncontrollable distortions.
According to PASBO, school pension costs will continue to increase dramatically resulting in more program and personnel cuts in future budgets as well as draining reserves at unsustainable rates.
Two tools for draining reserves from the system are being developed and tested and will be ready when needed.
When the credit policies were adopted, it was well understood that unwinding the policy accommodation would likely benefit from having new and enhanced tools for draining reserves.
I would argue that this language contains much more direct and valuable information about the likely path of the short-term interest rate target than does any decision about draining reserves.
The governor is worried that legislators, eager to keep their constituents happy in an election year, would seek ways to paper over the shortfall - draining reserves, shifting funds forward from future budget periods and using other devices to avoid deep cuts in state services.
The Fed will have the additional task of draining reserves and will use a set of instruments to accomplish this.
Other Fed officials have suggested alternative methods such as raising the interest rate the central bank pays on bank reserves or relying on draining reserves directly from the system through short-term transactions.
These data indicate that the Desk's actions were not exactly as prescribed by the operating procedure: They generally added less than indicated when the procedure called for adding reserves and drained less than indicated when the procedure called for draining reserves.
Walking a financial tightrope, officials say they will put off rate hikes for one year and cover a projected $112 million deficit by draining reserves to just $66 million by the end of the budget year.