Central banking in the credit turmoil: An assessment of Federal Reserve practice

►Central bank understood in terms of fiscal features of money, credit, and interest on reserves policies. ►Monetary policy, buying treasuries with reserves, transfers all revenue directly to treasury. ►Credit policy is debt-financed fiscal policy. ►Interest on reserves frees monetary policy to fund credit policy independently of interest rate policy. ►Ambiguous boundary of responsibilities between Fed and Congress contributed to panic in fall 2008.