Editing Federal Reserve (section)

==== Reserve requirements ====
An instrument of monetary policy adjustment historically employed by the Federal Reserve System was the fractional [[reserve requirement]], also known as the required reserve ratio.<ref>{{Harvnb|BoG|2005 | pp=30}}</ref> The required reserve ratio set the balance that the Federal Reserve System required a depository institution to hold in the Federal Reserve Banks.<ref name="BoG 2005 pp=27">{{Harvnb|BoG|2005 | pp=27}}</ref> The required reserve ratio was set by the board of governors of the Federal Reserve System.<ref>{{Harvnb|BoG|2005 | pp=31}}</ref> The reserve requirements have changed over time and some history of these changes is published by the Federal Reserve.<ref name="hist_resreq">{{Cite journal |last=Feinman |first=Joshua N. |date=June 1993 |title=Reserve Requirements: History, Current Practice, and Potential Reform |url=http://www.federalreserve.gov/monetarypolicy/0693lead.pdf |journal=[[Federal Reserve Bulletin]] |pages=569–589 |access-date=August 29, 2011}}</ref>

As a response to the [[2008 financial crisis]], the Federal Reserve started making interest payments on depository institutions' required and excess reserve balances. The payment of interest on excess reserves gave the central bank greater opportunity to address credit market conditions while maintaining the federal funds rate close to the target rate set by the FOMC.<ref>{{Cite web |date=October 6, 2008 |title=Board announces that it will begin to pay interest on depository institutions required and excess reserve balances |url=http://www.federalreserve.gov/monetarypolicy/20081006a.htm |access-date=August 29, 2011 |publisher=Federal Reserve}}</ref> The reserve requirement did not play a significant role in the post-2008 interest-on-excess-reserves regime,<ref name="fed-zero-rr-pr">{{Cite web |date=March 15, 2020 |title=Federal Reserve Actions to Support the Flow of Credit to Households and Businesses |url=https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315b.htm |access-date=May 10, 2020 |website=Federal Reserve System}}</ref> and in March 2020, the reserve ratio was set to zero for all banks, which meant that no bank was required to hold any reserves, and hence the reserve requirement effectively ceased to exist, though the legal framework exists for it to be reinstated at any time.<ref name="fed-zero-rr"/><ref>Federal Reserve Act, Section 19, 12 U.S.C. § 461</ref>