BAR0803-14 MACRO

Methods used by the Federal Reserve to regulate the money supply.

• Reserve requirement changes. The percentage of deposits banks must keep as reserves.
• Open market operations. The Treasury buys or sells government securities in the open market to control the money supply.
• Discount rate. The rate of interest banks pay when borrowing from Federal Reserve Banks.
• Margin requirement. The percentage of an investment in qualified securities, that investors must pay from their own funds.