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Saturday, April 18, 2009

US banks putting their money back in the Fed

Here is an odd development; US commercial banks are again accumulating deposits at the Federal Reserve. These deposits shot up around the time of the Lehman crisis. At the same time, the Federal Reserve started to offer interest rates on deposits.

As the Lehman liquidity crisis subsided, banks ran down their deposits at the Fed. More recently, Banks have again started to stash their cash back with Bernanke.

I have no idea why.

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