Selective credit controls, in retrospect, were a blunt instrument that was too unpredictable and extreme to use effectively. And the Board of Governors has found that reserve requirements, which represent a tax on depositories because our reserves do not bear interest, are best held steady at the lowest level consistent with the efficient implementation of policy.
Instead, the Federal Reserve controls its balance sheet to influence a rate quoted by market participants any time that the reserve market is open -- the overnight federal funds rate. In truth, as you all know, movements in that rate have little direct significance, except to reserve managers and those relatively few others concerned with the overnight cost of funds.