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Home / Mike Norman Economics / Unstuffing banks with Fed deposits: Why and how Robert McCauley

Unstuffing banks with Fed deposits: Why and how Robert McCauley

Summary:
US banks currently hold almost trillion in Fed deposits, as a result of the ongoing balance sheet expansion by the Federal Reserve. Meanwhile, a year-long exclusion of Fed deposits and US Treasuries from bank capital rules is set to expire on 31 March. This column proposes a simple, feasible, and mandate-consistent strategy to replace trillion in deposits with Treasury bills. These Treasuries could be held not only by banks, but also by mutual funds and non-residents, and this substitution also could save taxpayers money....Vox.euUnstuffing banks with Fed deposits: Why and howRobert McCauley, Corte Real Advisors; Boston University, University of Oxford

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US banks currently hold almost $4 trillion in Fed deposits, as a result of the ongoing balance sheet expansion by the Federal Reserve. Meanwhile, a year-long exclusion of Fed deposits and US Treasuries from bank capital rules is set to expire on 31 March. This column proposes a simple, feasible, and mandate-consistent strategy to replace $3 trillion in deposits with Treasury bills. These Treasuries could be held not only by banks, but also by mutual funds and non-residents, and this substitution also could save taxpayers money....
Vox.eu
Unstuffing banks with Fed deposits: Why and how
Robert McCauley, Corte Real Advisors; Boston University, University of Oxford
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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