Social Sciences and History / Unit 14 SSH 1332 short lesson, about 20 seconds
Three Traditional Tools and the IORB Regime
Captions available
The idea
With limited reserves a central bank has three traditional tools: open market operations, buying and selling government bonds, the most used; reserve requirements; and the discount rate, its loan rate to banks. With ample reserves, the FOMC's main tool is the interest rate on reserve balances.
In practice
Federal funds rate: overnight bank-to-bank lending.
Where people slip
Older sheets may expect open market operations.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Something wrong in this lesson? Flag it