Interest on excess reserves and Pound: Difference between pages

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imported>Doug Williamson
(Updated entry: Added link to Federal Open Market Committee)
 
imported>Doug Williamson
(Expand first definition.)
 
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(IOER).  
1.  


The practice of central banks of paying interest on deposits from depository institutions (notably commercial banks) that are in excess of amount of deposits that the bank may be required to hold (together with cash) in view of its liabilities or for other regulatory reasons.
One unit of the UK pound sterling (GBP).


Payment of interest on excess balances means that banks are less likely to lend central bank deposits ([[reserves]]) among themselves (in "interbank" or (US) "federal funds" transactions) at rates below the rate paid on the excess. Varying the interest rate on excess reserves, then, allows the central bank to influence short-term rates in the economy generally.
For most of the historical period up the early 19th century, it could - in theory - be exchanged for one pound (weight) of silver.


In the US the Federal Reserve introduced a policy, its "IOR policy", of paying interest on monetary institutions deposits ("reserves") in October 2008 and both required and excess reserves are remunerated. The Financial Services Regulatory Relief Act of 2006 authorised payment of interest on balances of or on behalf of depository institutions beginning October 1, 2011 but the Emergency Economic Stabilization Act of 2008 accelerated the effective date to October 1, 2008.
Thereafter the pound was generally backed by gold (the 'gold standard').


Since 1931, the pound sterling has been a fiat currency.


==See also==
* [[Federal Open Market Committee]]


[[Category:Long_term_funding]]
 
[[Category:Compliance_and_audit]]
2.
 
A pound is also one unit of a number of other currencies including those of Egypt (EGP), Lebanon (LBP), Sudan (SDG) and Syria (SYP).
 
 
== See also ==
* [[Egypt]]
* [[Fiat currency]]
* [[FKP]]
* [[GBP]]
* [[GIP]]
* [[Gold standard]]
* [[Libra]]
* [[Lira]]
* [[SHP]]
* [[SSP]]
* [[Sterling]]
* [[United Kingdom]]
 
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 15:14, 11 December 2019

1.

One unit of the UK pound sterling (GBP).

For most of the historical period up the early 19th century, it could - in theory - be exchanged for one pound (weight) of silver.

Thereafter the pound was generally backed by gold (the 'gold standard').

Since 1931, the pound sterling has been a fiat currency.


2.

A pound is also one unit of a number of other currencies including those of Egypt (EGP), Lebanon (LBP), Sudan (SDG) and Syria (SYP).


See also

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