1.   Last December the Federal Reserve adjusted its reserve requirements on time deposits to encourage banks to lend more.

2.   Moreover, banks must be given time to adjust to changing reserve requirements.

3.   Reserve requirements on banks will have to be standardized if some banks are not to suffer a competitive disadvantage.

4.   Reserve requirements on domestic CDs increase the cost of funds to banks.

5.   The authorities could impose statutory minimum reserve requirements on the banks to prevent them choosing to reduce their liquidity ratio and choosing thereby to create more credit.

6.   Banks choosing to operate with a lower liquidity ratio could be prevented by the authorities imposing statutory reserve requirements on banks.

7.   The manipulation of statutory reserve requirements is another form of credit rationing which is used in many countries.

8.   Portfolio controls consist of special deposits, supplementary special deposits, reserve requirements, directives, and moral suasion.