US monetary policy weakened by fees and interest changes, paper finds
A working paper published yesterday by the University of Mississippi warns that the Federal Reserve may have impaired its monetary policy by adjusting interest payments and fees on overdrafts.
In Interest on Reserves, Settlement, and the Effectiveness of Monetary Policy, author Joshua Hendrickson notes that the Fed changed its policy over the last few years to pay interest on excess reserves, raise fees on uncollateralised overdrafts and abolish fees for collateralised overdrafts.
Hendrickson
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