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Course: AP®︎/College Macroeconomics > Unit 4

Lesson 6: Monetary policy
Economics
AP®︎/College Macroeconomics
Financial sector
Monetary policy
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Ample reserves regime

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Before the 2008 financial crisis, the banking system operated differently than it does today. After 2008, commercial banks started holding a significant amount of reserves with the central bank due to stricter regulations and the introduction of interest payments on those reserves. With ample reserves, commercial banks could deposit their extra money with the central bank and earn a safe and guaranteed interest, known as the interest on reserves rate (IOR). Created by Sal Khan.

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