Banks slashing reserves to zero, freeing up funds for growth.
Retail sweep programs are computer software used by banks to move customer deposits between different types of accounts to reduce required reserves. This has allowed many banks to lower their required reserves to levels below what they need for daily operations. By analyzing data from U.S. banks, researchers found that these sweep programs have made banks economically nonbound and eliminated the economic burden of reserve requirements. In simple terms, these programs have significantly reduced the demand for bank reserves.