If, however, ON RRPs are offered above the level of money market rates that would be produced by IOER alone given prevailing frictions, ON RRPs should become attractive and help to form a floor for money market rates, either directly through increased take-up that reduces reserves or indirectly through the competitive pressure I described. Since money funds – the majority of the Fed’s ON RRP counterparties – don’t face the same balance sheets costs as banks, the floor formed by ON RRPs should be relatively firm. While ON RRPs are a potentially useful tool for monetary policy control with large amounts of excess reserves, FOMC and market participants have noted the potential for very large regular usage to alter patterns of financial intermediation. Further, a fixed-rate structure with no usage limits could exacerbate liquidity pressures during times of stress. 11 The FOMC recently authorized testing of a cap on the total daily usage of the ON RRPs that could help mitigate these risks. I’ll return to these risks and some ways that they may be mitigated in a bit. In sum, arbitrage activities by banks, complemented as needed by ON RRP operations, should cause a higher IOER rate to lead to higher levels of market rates. However, if the pressure on market rates from the Fed’s administered rates turns out to be insufficient, the Committee has a range of other tools – including term deposits, term RRPs, and asset sales – that could be used to help tighten the stance of policy.
Gent Sejko: Increasing the formalization of the Albanian economy Address by Mr Gent Sejko, Governor of the Bank of Albania, at the joint press conference with the Minister of Finance and Economy, Tirana, 7 December 2017. * * *  Dear Minister Ahmetaj, Dear media representatives, It is with great pleasure that I present this concrete initiative of the Bank of Albania (BoA) in the framework of our efforts to promote the formalization of the economy. It is encouraging to see that a series of initiatives by other Albanian authorities are taken for the same purpose, to enhance the law enforcement and the use of financial channels. Experience has shown that complementary efforts of regulatory institutions lower the policies’ implementation costs and increase their likelihood for success. Informal activity imposes open and hidden costs for the Albanian economy and the society. It damages the country’s public finances, increases the tax burden and distorts its effect on the economic agents, hampers competition and increases the costs of fair business activity, reduces business financing resources and curbs their normal development, and creates social problems that arise from lack or insufficient coverage of social and health insurance. From the BoA’s point of view, as the monetary authority and as the supervisor and regulator of the banking sector, informal activity reduces the effectiveness of our stabilization policies and creates the premises for instability of one or more segments of the financial system.