Banks currently get 2.35% on their reserves at the Fed.
and not do anything with it.
Banks have no control over reserves in the system. Only the Fed and depositors have control.
Every bank could lend out every dollar of excess reserves they hold....and tomorrow all of that money would end up right back in the banking system as reserves. Still earning 2.35%.
I was thinking of this interview that Judy Shelton did with CNBC.
She mentions the Federal Reserve is paying interest rates on excess reserves as part of a system they created back in 2008.