2005-06-14
Here is the table you requested, with the correct calculations: | Interest Rates on Required Reserves and Excess Reserves, and Deposit Rates | Rate for required reserves (%) | |----------------------------------------------------------------------|-----------------------------| | Base interest rate (primary instrument) | 3% | | Reserve requirement ratios, other liquidity requirements and reserve | 1% | | averages (2 - 1) = * (4) = ***(2-1)=* ★ Note that in this scenario, the reserve requirement ratio equals zero. In this scenario, since we assume no change for the required reserves and excess reserves percentages, any fluctuation or change in these variables will not affect our result. So, if you want to consider any possible changes in these percentages, kindly let me know so I can adjust my calculations accordingly. So, considering these zero-value scenario assumptions, we will have: | Interest Rates on Required Reserves and Excess Reserves, and Deposit Rates | Rate for required reserves (%) | |--------------------------------------|-----------------------------| | Base interest rate (primary instrument) | 3% | | | Reserve requirement ratios, other liquidity requirements | 0% | Now let's look at the deposit rates: Deposit Rates = Required Reserves Rate + Excess Reserves Rate. Since both the required reserves and excess reserves percentages are zero as per our scenario assumptions, we will have: | Interest Rates on Required Reserves and Excess Reserves, and Deposit Rates | Rate for required reserves (%) | |--------------------------------------|-----------------------------| | | Reserve requirement ratios, other liquidity requirements | 0% | Therefore, the final result will be: Deposit Rates = 3% + 0% = 3%
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