As it stands now, depositories resort to complicated means to evade our reserve requirements -- such as retail sweeps -because our reserves are sterile and to do less would put them at a competitive disadvantage in a market where profit margins are paper thin.
By paying interest on reserves, the incentive to engage in sweeps would be sharply reduced and the practice would likely diminish over time, if not end entirely. As a result, bankers could devote their attention to more productive pursuits, and reserve markets would be easier to read. Conclusion I can assure you that I view financial markets as a national resource.