I thought the only reason that banks had excess reserves was due to the fed paying 50 basis points of interest.  This was the fed&#x27;s way of preventing +&#x2F;-$2.28 Trillion [1] from being loaned out thus adding $2.28 trillion x (fractional reserve rate...10 if mandatory reserves were 10%) to the money supply through lending.   With negative interest rates excess reserves again become an expense, therefore removing banks disincentive to lend.<p>[1] <a href="https:&#x2F;&#x2F;research.stlouisfed.org&#x2F;fred2&#x2F;series&#x2F;EXCSRESNS" rel="nofollow">https:&#x2F;&#x2F;research.stlouisfed.org&#x2F;fred2&#x2F;series&#x2F;EXCSRESNS</a>
[2] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Fractional-reserve_banking" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Fractional-reserve_banking</a>