This paper shows reserve requirements remain a tax at the margin. Aggregate reserves look ample, yet deposit-weighted distributions reveal a hollow buffer. Many deposits still face binding constraints despite system-wide abundance.
The 2020 Federal Reserve elimination of reserve requirements led banks to significantly reallocate their balance sheets toward both securities and loans, though the marginal effect on credit supply was [large/limited] relative to securities investment.
Formally derives binary incidence of reserve requirements: with interest or excess reserves no tax, but beyond buffers costs reappear; US data demonstrate fifty‑fold safety margin since 2008 for reserve policy.