Question

The current circumstance of superabundant reserves is a direct result of

Group of answer choices

A. the mamcroprudential response to the 2008 crisis.
B. the Depository Institutions Deregulation and Monetary Control Act of 1980
C. the Garn-St.Germain Act of 1982
D.the Volcker Regime.
E. policies pursued during the Great Moderation.

Answer 1

The superabundant reserves in the banking system result from the macroprudential measures taken in response to the 2008 financial crisis, including monetary intervention by the Federal Reserve, legislative financial support measures such as TARP and the American Recovery and Reinvestment Act, and regulatory reforms introduced by the Dodd-Frank Act.

Step-by-step explanation:

The current circumstance of superabundant reserves is a direct result of the macroprudential response to the 2008 crisis. This was largely influenced by the actions taken by the Federal Reserve Bank, which included the purchase of traditional and nontraditional assets off banks' balance sheets to inject money into the banking system and increase the funds available for lending.

Additionally, the passage of the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act provided financial support to institutions and encouraged consumer spending, respectively. These measures, along with the regulatory reforms brought by the Dodd-Frank Act, contributed to the rise in excess bank reserves as banks became more cautious about lending during economic contraction.