Ben Craig focuses primarily on the economics of banking and worldwide finance.
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The federal funds market was a market in which domestic commercial banks with excess reserves would lend funds overnight to other commercial banks with temporary shortfalls in liquidity before the financial crisis. Just just What has occurred to the market considering that the financial meltdown? Although the bank operating system is awash in reserves and also the federal funds price happens to be near zero, industry has proceeded to use, however it changed. Various organizations now participate. Government-sponsored enterprises like the Federal Residence Loan Banks loan funds, and international commercial banking institutions borrow.
The mechanics since the crisis have changed although monetary policy has focused on setting an appropriate level for the federal funds rate since well before the financial crisis. Continue reading