Understanding Reserves The Fed used to pay banks interest on “excess reserves”. Excess reserves are total reserves minus required reserves. As announced on March 15, 2020, the Board of Governors reduced reserve requirement ratios on net transaction accounts to 0 percent, effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. Since there are no reserve requirements on either checking or savings deposits, all reserves are effectively excess reserves, and the Fed pay banks interest on everything. That includes free money crammed down banks throats via QE. Reverse Repos The ... (full story)