When it comes time to absorb those reserves and raise interest rates, the Federal Reserve has a variety of tools at its disposal, ranging from increasing the rate it pays on excess reserves, to absorbing reserves by engaging in reverse repurchase agreements or offering term deposits to depository institutions, to selling the assets on its balance sheet.
For their part, workers have a responsibility to improve their financial literacy and develop the skills and confidence to practice strategies for effective financial management. This improvement of financial literacy will become even more crucial if individual accounts are introduced as a modification to the current Social Security system, as proposed by the Administration. 6  BIS Review 3/2005