The Fed doesn’t like narrow banks, but asset managers do

Narrow banks would funnel cash to the Fed to get its rate – money managers are intrigued

They don’t exist yet, but the possibility of narrow banks is making the Federal Reserve very uneasy.

The novelty banks would have just one purpose: to act as a channel for the big cash pools of money managers, corporations and other large institutions into the Fed, where those funds would earn its succulent interest on excess reserves (IOER) rate.

But the Fed sees the idea as a threat: it has suggested the narrow banks could undermine commercial banks, be a destabilising force in times of

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: