Fed IOER amendment aimed at ‘thwarting’ The Narrow Bank

The New York Fed has fought TNB’s bid to open a master account

In what appears to be a tactical move targeted at just one institution, The Narrow Bank (TNB), the Federal Reserve proposed a rule on March 6 that could take away the option of arbitraging the interest paid on reserves.

The move came as the New York Fed was set to respond to a lawsuit by TNB. The legal action was originally launched as the Fed dragged its heels on granting TNB authorisation to open an interest-bearing reserves account with the central bank, known as a master account.

The Fed

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