Mason Grillot

Increase by $$0\mathrm{.}60$ million

Geoffrey

Sorry, Sire, that's not correct. The bank will lose $$0\mathrm{.}60$ million in government bonds $($an asset$),$ but it will gain $$0\mathrm{.}60$ million in reserves $($another asset$)--$ so the overall change in assets will be zero.

Geoffrey

But how will these open market operations affect Typical Bank's required reserves and excess reserves?

Both required reserves and excess reserves will rise.

Required reserves will not change, but excess reserves will rise.

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