riskless, little or no economic capital would be needed to support such arbitrage by banks. in this way, the ioer rate should theoretically form a “ floor ” beneath short - term interest rates, allowing the fed to achieve its target for the fed funds rate even with a very high level of reserve balances. in practice, however, many lenders in the u. s. money markets are not banks and so cannot earn ioer. moreover, from the perspective of a potential lender to a bank, the arbitrage in the five years prior to the crisis, total reserve balances averaged $ 20 billion and excess reserves – balances in excess of those required to satisfy reserve balance requirements – averaged about $ 1. 5 billion. currently, total reserve balances are about $ 2. 8 trillion, nearly all of which are excess reserves. for discussion of changes in recent years to activity in the fed funds market, see the liberty street economics blog posts, “ who ’ s lending in the fed funds market ” and “ who ’ s borrowing in the fed funds market, ” at http : / / libertystreeteconomics. newyorkfed. org /. the fr 2420 is a transaction - based report that collects daily data on federal funds transactions, eurodollar transactions, and certificates of deposits from domestically chartered commercial banks and thrifts that have $ 26 billion or more in total assets and from u. s. branches and agencies of foreign banks with total third - party assets of $ 900 million or more. the fr 2420 data is used to support the implementation of monetary policy and the analysis of money market conditions. the board of governors of the federal reserve system is responsible for setting the rate of interest on reserves. since december 16, 2008, the interest rates on required reserve balances and excess reserve balances have both been ¼ percent, but the rates need not be the same. more information can be found in regulation d. see http : / / federalreserve. gov / bankinforeg / reglisting. htm # d. bis central bankers ’ speeches transaction i just described is not riskless. as a result, many lenders limit their risk exposure to any individual bank, reducing the force of competition in the market for funds. 6 in addition, while banks do not need economic capital to conduct this arbitrage, they do face regulatory balance sheet costs from expanding their assets, even in the form of excess

$ 111. 0 million in abaco ). this is a debt management strategy collectively agreed between the central bank and the ministry of finance, in order to offset any balance of payment strain from import financing around rebuilding activities. the ability to see some return to activity in grand bahama in 2020, favors the onset of the recovery of tourism earnings. having the abaco tourism plant substantially back in production by 2021 would help to normalize return to the still positive mediumterm outlook for reserves. until then, the tourism marketing strategy has to succeed in attracting some of the displaced business from the northern islands to undamaged facilities elsewhere in the bahamas. resilience post - natural disasters at this point, i would like to delve deeper into the topic of resilience. drawing on the work of the imf, the world bank and others, a framework for building resilience would consider three major elements : the physical or structural infrastructure, financial factors and the social, post - disaster resilience. i will keep the focus today on financial resilience. 6 that said, both social and infrastructural vulnerabilities still reduce to financial costs that ought to be addressed in policies that build buffers and provide ample insurance for both public sector interests and private households. financial resilience for the public sector, the world bank and imf inspired multi - layered approach to managing the fiscal and macroeconomic risks of natural disasters focus on four areas. they include : 1. fiscal buffers ( as a means of self - insurance ) 2. securing direct insurance ( through risk - pooling mechanisms ) 3. pre - arranging emergency access to credit ( for rapid response ) 4. securing access to international financial and humanitarian assistance physical resilience encompasses structural measures aimed at mitigating the impacts of natural disasters. it includes investment in infrastructure including new structures, upgrades to existing ones ; and developing and fine tuning policies related to zoning, building codes, land use, early warning systems and “ risk maps ”. the social resilience element comes into play post - disaster. it involves the response of the government, wider community and relevant organizations to the various humanitarian needs that exist following the occurrence of a natural disaster. the relevant authorities must be able to ensure minimal interruption in national security, emergency medical care services and essential utilities. additionally, the established frameworks must ensure that aid to the adversely affected population is efficiently distributed without undue delays and abuses. the bahamas has made