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Ample Reserves Regime

A monetary policy framework where the central bank maintains large reserve balances in the banking system, steering interest rates by adjusting the rate paid on reserves rather than through open market operations. This approach became prominent after the 2008 financial crisis when quantitative easing flooded the banking system with excess reserves. Under this regime, the fed funds rate is primarily controlled through the interest on reserve balances rate.

Example

Under the ample reserves regime, the Federal Reserve sets short-term rates by adjusting the interest it pays on bank reserves rather than by draining liquidity.