Fed IOER amendment aimed at ‘thwarting’ The Narrow Bank
The move appears to specifically target The Narrow Bank’s business model, the firm says
In what appears to be a tactical move targeted at just one institution, The Narrow Bank (TNB), the Federal Reserve proposed a rule on March 6 that could take away the option of arbitraging the interest paid on reserves.
The move came as the New York Fed was set to respond to a lawsuit by TNB. The legal action was originally launched as the Fed dragged its heels on granting TNB authorisation to open an interest-bearing reserves account with the central bank, known as a master account.
The Fed
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