banknotes because of concerns about the health of a bank or the banking sector. that is why we are working hard to establish a european banking supervisor, and why we should take all necessary measures as soon as possible to restore confidence in the banking sector. now, let me come back to the main purpose of our event today : the launch of the €5 banknote of the europa series. the main reason for the new series is that the first euro banknotes were issued over 11 years ago and the technology in those banknotes is more than 15 years old. even though the number of counterfeits is relatively low, it is important to maintain trust in euro banknotes and to stay ahead of developments. so on 2 may we are bis central bankers ’ speeches launching the €5 banknote as the first denomination of the new series. the other denominations will follow in ascending order in the next few years. apart from the more vivid colour of the €5 banknotes, the most visible change in the banknotes is probably the emerald number on the front and the portrait of europa in both the watermark and the hologram. however, maybe the most important changes are those which are invisible to the human eye. we have not only applied a special coating, which will make the banknotes more durable and should extend their life, but have also incorporated several new or enhanced security features which are used by banknote authenticity devices and banknote handling machines. in most countries the €5 banknotes will be mainly brought into circulation via bank counters and the cash ordered as change by retailers. as a result, the new €5 banknotes will gradually arrive in everyone ’ s wallets. only in some countries will €5 banknotes also be issued via atms, but even in these countries banks seem to be reducing the availability of €5 banknotes in atms. we don ’ t see this as a good development ; banks should consider issuing more €5 banknotes via atms. it would be convenient both for the public, which tends to pay cash for small - ticket items, and for retailers, which would need less change. additionally, it would also mean that the overall quality of the €5 banknotes in circulation would be higher in many countries. in the presentations today and tomorrow you will learn more about the design and security features of the new euro banknotes and about the preparations for the introduction of the europa series by central banks and the various stakeholders in the cash cycle. these presentations will make

##6 / feds. 2020. 022. figure 3 : fed lowers the federal funds rate by decreasing administered rates note : the blue dot indicates the previous equilibrium federal funds rate, and the red square indicates the new equilibrium federal funds rate. ffr is federal funds rate. iorb is interest rate on reserve balances. on rrp is overnight reverse repurchase agreement. source : figure 4 in jane ihrig and scott wolla ( 2022 ), “ let ’ s close the gap : updating the textbook treatment of monetary policy, ” journal of economic education, vol. 53 ( 3 ), pp. 232 – 49. figure 4 : graphical comparison of scarce - reserves regime ( left panel ) and ample - reserves regime ( right panel ) scarce - reserves regime ample - reserves regime note : ffr is federal funds rate. iorb is interest rate on reserve balances. on rrp is overnight reverse repurchase agreement. source : figure 5 in jane ihrig and scott wolla ( 2022 ), “ let ’ s close the gap : updating the textbook treatment of monetary policy, ” journal of economic education, vol. 53 ( 3 ), pp. 232 – 49. summary of fed ’ s toolbox policy implementation tools administered rates 1. interest on reserve balances ( iorb ) 2. overnight reverse repurchase agreement facility ( on rrp ) 3. discount window 4. open market operations 1. 2. iorb rate on rrp rate 3. discount rate conclusions • the fed sets the target range for the federal funds rate. • the fed uses its monetary policy tools to guide market rates toward the fed ’ s desired setting of policy. • we are currently tightening monetary policy, and changes in the federal funds rate are transmitted to other interest rates through arbitrage and by affecting investors ’ expectations. • changes in interest rates affect the decisions of consumers and businesses with a lag.