【正文】 pyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1329 Case Against Independence（反對獨(dú)立性的理由） ? Undemocratic（不民主） ? Unaccountable ? Difficult to coordinate fiscal and moary policy （不能與其他政策如財(cái)政政策相互協(xié)調(diào)） ? Has not used its independence successfully （大蕭條期間，并沒有很好的承擔(dān)最后借款人的角色） Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1331 Tools of Moary Policy ? Open market operations – Affect the quantity of reserves and the moary base ? Changes in borrowed reserves – Affect the moary base ? Changes in reserve requirements – Affect the money multiplier ? Federal funds rate: the interest rate on overnight loans of reserves from one bank to another – Primary instrument of moary policy Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1333 Demand in the Market for Reserves ? Since the fall of 2020 the Fed has paid interest on reserves at a level that is set at a fixed amount below the federal funds rate target. ? When the federal funds rate is above the rate paid on excess reserves, ier, as the federal funds rate decreases, the opportunity cost of holding excess reserves falls and the quantity of reserves demanded rises ? Downward sloping demand curve that bees flat (infinitely elastic) at ier Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1335 FIGURE 1 Equilibrium in the Market for Reserves Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1337 Affecting the Federal Funds Rate (cont’d) ? Open market operations have no effect on the federal funds rate when intersection occurs at the flat section of the demand curve. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1339 Affecting the Federal Funds Rate (cont’d) ? When the Fed raises reserve requirement, the federal funds rate rises and when the Fed decreases reserve requirement, the federal funds rate falls. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1341 FIGURE 3 Response to a Change in the Discount Rate Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1343 Open Market Operations ? Dynamic open market operations ? Defensive open market operations ? Primary dealers ? TRAPS (Trading Room Automated Processing System) ? Repurchase agreements ? Matched salepurchase agreements Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1345 Discount Policy ? Discount window ? Primary credit: standing lending facility – Lombard facility ? Secondary credit ? Seasonal credit ? Lender of last resort to prevent financial panics – Creates moral hazard problem Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1347 Advantages and Disadvantages of Discount Policy ? Used to perform role of lender of last resort – Important during the subprime financial crisis of 20202020. ? Cannot be controlled by the Fed。 2020 Pearson AddisonWesley. All rights reserved. 1348 Reserve Requirements ? Depository Institutions Deregulation and Moary Control Act of 1980 sets the reserve requirement the same for all depository institutions ? 3% of the first $ million of checkable deposits。 2020 Pearson AddisonWesley. All rights reserved. 1349 Disadvantages of Reserve Requirements ? No longer binding for most banks ? Can cause liquidity problems ? Increases uncertainty for banks Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 1351 Moary Policy Tools of the European Central Bank (cont’d) ? Reserve Requirements – 2% of the total amount of checking deposits and other shortterm deposits – Pays interest on those deposits so cost of plying is low