Cash holdings are an increasingly large component of US commercial banks' balance sheets. This demonstrates the fact that thus far the Fed's monetary expansion is not producing the "optimal" result. Banks are not growing the non-cash portion of their balance sheets fast enough to offset these rising reserves. A more optimal policy would be able to take that into account.
In fact the latest data shows that the non-cash component is declining.
|Source: FRB (click to enlarge)|
For those who are interested, the Fed recently published a technical paper (here) indicating that a massive QE program in the face of a "large and persistent adverse demand shock" is suboptimal. The data on credit expansion (above) seem to support that argument.
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