If you thought 2008 was bad, just wait..

Historically, banks are required to keep 10% of their loaned-out capital in reserves. However, the Fed just took an extraordinary step of reducing that to 0%.

Banks no longer to keep any assets in reserve. This will turn a house of cards into a gargantuan palace of cards.

via tradersmagazine

In an unprecedented and historic move, the Federal Reserve has lowered its benchmark lending rate to zero.

Yes, ZERO. And the central bank will embark upon a new quantitative easing program designed to stimulate the US economy which has proven susceptible to Covid 19 pressures. The Fed;s asset purchases will consist of U.S. Treasuries and mortgage-backed securities beginning Monday. The majority of purchases will be Treasury securities.

Also, the Fed slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days.

Fed Fund target rate range is now 0% to 0.25%.

According to CNBC, the Fed also cut reserve requirement ratios for thousands of banks to zero. In addition, in a global coordinated move by centrals banks, the Fed said the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank took action to enhance dollar liquidity around the world through existing dollar swap arrangements.

Federal reserve requirements – ZERO effective 03/26/20

“Reserve Requirements
As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

The following content explains the Board’s authority to impose reserve requirements and how reserve requirements were administered prior to the change in reserve requirement ratios to zero.

https://www.investmentwatchblog.com/no-reserve-requirement-the-fed-...