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Tools of Monetary Policy (15.2-15.3) ® The Fed utilizes traditional tools and new tools implemented after the 2007 — 2009 Financial Crisis. ¢ Traditional Tools of Monetary Policy (1) Reserve Requirements e Fed’s regulation that banks must hold a certain fraction of their checkable deposits as vault cash or deposits with the Fed. * equal to zero for the first $16.9 million, 3% from $16.9 to $127.5 million, and 10% on checkable deposits over $127.5 million. e ® March 2020 the Fed set the required reserve ratio to 0%. N,