Central Banks
Powell Says End of Fed’s Interest Paid to Banks Won’t Save Money
Federal Reserve Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs in Washington, DC, on June 25.
Photographer: Kent Nishimura/Getty ImagesFederal Reserve Chair Jerome Powell said a proposal to eliminate the interest paid to banks that deposit cash at the central bank would not save money, and moving back to a scarce reserves regime would be challenging and risk volatility.
“There’s an illusion that it would save money, that is not the case,” Powell said in a Senate Banking Committee hearing on Wednesday.