A decrease in Federal Reserve float decreases member bank reserves.

Question

Quizplus · Accepted Answer

Federal Reserve float refers to the temporary net increase in checking accounts before checks are cleared between banks. A decrease in float means that checks are clearing faster or there are fewer checks in the process of clearing, leading to a reduction in the amount of funds available in member bank reserves. This is because the funds are moving out of the banking system more quickly, reducing the overall reserves.

A Decrease in Federal Reserve Float Decreases Member Bank Reserves