# 貨幣銀行學 chapter 16
###### tags: `貨幣銀行學`
## Discuss:
1. the market for reserves
2. the federal funds rate
3. monetary policy
## Conventional monetary policy
1. implementation
2. advantage & limitation
## Review
* recall R=RR+ER
* Excess reserves are insurance against deposit outflows
* Given D and rr, banks have no control over RR
:arrow_forward: ER is the main part that we should care
## Demand cure for reserves
1. A bank can earn interest by lending (federal funds)
2. A bank can interest on its reserves (from 2008)
3. The opportunity cost of holding excess reserves is the interest could have been earned minus the interest that is paid on reserve
:::success
i~ff~-i~or~=opportunity cost of holding excess reserve
==or : interest on reserves==
higher i~ff~ :arrow_right: lower demand for reserves

:::
4. Why lower bound
In the federal funds market some banks are borrowers, and some are lenders when i~ff~=i~or~ all banks become borrowers
:arrow_right: all banks demand for reserve(借了來存利差)
## supply curve for reverse
1. R=BR+NBR BR=borrowed reserve NBR= non-borrowed reserves
2. To borrow from the Fed ,banks face interest rate i~d~(discount rate)
3. To borrow from the FF market banks face interest rate(i~ff~)
4. If i~ff~<i~d~ bank will not borrow from fed than BR=0 R=BR+NBR NBR controlled fully
5. If i~ff~>i~d~ bank will borrow from fed more and more
## Equilibrium in the ==market of reserves==
i~d~
i~ff~
i~or~
## The determination of i~or~ and i~d~
The Fed determines i~ff~ target
i~d~ = i~ff~ target + some basis points
i~or~= i~ff~ target - some basis points
## Four tools of monetary policy
1. open market operation
2. discount lending
3. reserve requirement
4. interest on reserves
1~3 conventional MP
## Open market purchase (NBR :arrow_up:)
1. case A(交點在d斜線上) supply shift right
i~ff~:arrow_down:
3. case B(焦點在d水平線上)supply shift right
i~ff~:arrow_right:
## Lowering the discount rate
1. case A(交點在s垂直線上) supply cure shift down
i~d~:arrow_down: i~ff~:arrow_right:
3. case B(交點在s水平線上) supply cure shift down
i~d~:arrow_down: i~ff~:arrow_down: borrow more
## Increase reserve requirement
1. case A(交點在d斜線上) demand curve shift right
i~ff~ :arrow_up: NBR:arrow_right:
3. case B(交點在s水平線上)demand curve shift right shift
不夠多沒用
## Increase interest in reserve(ie i~or~:arrow_up:)
1. case A(交點在d斜線上) demand curve shift :arrow_upper_left:
i~or~:arrow_up: i~ff~:arrow_right:
3. case B(交點在d水平線上) demand curve shift :arrow_upper_left:
i~or~:arrow_up: i~ff~:arrow_up:
## The operation procedure can limit fluctuation in i~ff~
demand curve shift right 在上下界中移動
## discount window
1. primary credit
2. secondary credit
3. seasourd credit