How could the federal reserve use the interest rate

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As the financial crisis of 2007-2009 was easing, the Federal Reserve needed an "exit strategy" to shrink its balance sheet and return bank reserves and the monetary base to more normal levels.

How could the Federal Reserve use the interest rate it pays on bank reserves to restrain banks from lending large amounts of excess reserves and increasing the money supply excessively?

In addition, how could the term deposit facility, the Fed's other new policy tool, restrain banks from lending large amounts of excess reserves all at once?

Reference no: EM131303028

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