Terms

Interest on Excess Reserves

Abbreviation
IOER
Interest on Excess Reserves (IOER) is interest that the Federal Reserve pays to banks for reserves they have in excess of their required levels



IOER Criticisms

  • Gave the banks free interest income during periods of QE  (when excess reserves were high)
  • QE is what creatd the excess reverses, so this is basically a "give away" to banks for free