Todd Keister testifies at congressional hearing on the Federal Reserve

On May 17, a subcommittee of the U.S. House of Representatives held a hearing entitled, “Interest on Reserves and the Fed’s Balance Sheet.” Among the four experts called to testify at this hearing was Rutgers economist Todd Keister.

The hearing was designed to help policy makers better understand the economic effects of the Federal Reserve’s recently authorized ability to pay interest on the reserves that commercial banks hold on deposit at the Fed. In his testimony, Professor Keister argued that paying interest on reserves “is not only essential for the implementation of monetary policy, but also sound economic policy” and “has no cost to the taxpayer.”

A transcript of Professor Keister's opening remarks at the hearing, plus his written testimony, are available online, as is a video of the hearing [his remarks start at the 41 minute mark].

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