Central Banks, Monetary Policy and the Business of Money

Every US financial company has a silent partner: the Federal Reserve. The Fed sets the price of overnight money, decides how many reserves the banking system holds, pays interest on those reserves, lends when markets seize up, runs the wholesale and instant payment rails, and decides who may hold an account at it. When it raised its policy rate from near zero to 5.25–5.50% between March 2022 and July 2023, it turned bank deposits from a free raw material into an expensive one. The hikes created ~$600bn+ of unrealised securities losses across US banks and broke Silicon Valley Bank, Signature Bank and First Republic. They also made money-market funds and brokerage cash sweeps very profitable and gave stablecoin issuers and neobanks a windfall of interest income on customer float. The Fed then cut rates in 2024–25, ended quantitative tightening on 1 December 2025, and under a new chair, Kevin Warsh, raised rates again in September 2026. This section explains how the Fed works and how it implements policy: the floor system, interest on reserves and the reverse repo facility. It covers how rate cycles, QE and QT, and lender-of-last-resort facilities move money through bank, broker, insurer, fintech and stablecoin income statements; why access to the Fed is a strategic asset; how the Fed's politics changed in 2025–26; and how an experienced operator reads the Fed. The ECB, the Bank of Japan and two African central banks appear briefly as comparisons.