【正确答案】The ability to change reserve requirements is a powerful tool which has the advantage and limitation, a central bank uses it infrequently, as slight adjustment of required reserve ratio, even 1% or 0. 5% will cause great influence on finance and credit. So a central bank prefers to use open market operations to change reserves rather than reserve requirements. 　　It has been argued that changing reserve requirement is a too powerful tool and that its use as a policy instrument would destabilize the banking system. The institutional arrangements through which the banking system adjusts to changing levels of reserves might not respond as efficiently to changing reserve requirements. Another advantage of open market operations is that they can be conducted quietly, while changing reserve requirements requires a public announcement. A central bank feels that some of its actions would be opposed if public attention was directed toward them. Now let us see more details of advantages and disadvantages of reserve requirement. 　　(1) Advantages of the reserve requirement 　　We will now outline some of the advantages of using the reserve requirement tool relative to the use of open market operations and discount rate. 　　a. Speed of impact. Changes in the reserve requirement induce banks to make balance sheet adjustments quite rapidly. When the central bank changes r, thousands of banks and thrift institutions experience an immediate change in their excess reserve positions. Therefore, changes in interest rates, credit conditions, and the monetary aggregates occur relatively quickly. These contrasts with open market operations, which impinge immediately only on those banks in which government securities dealers, maintain accounts. Some time may elapse before the impact of open market operations extends to the majority of banks. Likewise, a change in the central bank’s discount rate may not exert any immediate impact on those institutions not currently borrowing or contemplating borrowing at the discount rate. Therefore, if economic conditions require immediate action, use of the reserve requirement tool may be preferable to the central bank’s other instruments. 　　b. Neutrality a related argument is that the reserve requirement instrument is less discriminatory across depository institutions than are the other instruments of Federal Reserve policy. The impact of reserve requirement changes is spread across all banks and thrift institutions uniformly. One may therefore prefer the use of this installment on the basis that many more institutions are influenced in a similar way than is the case with the other instruments. 　　c. More straightforward announcement effect. Because this instrument is not employed frequently, and because changes in the reserve requirement are typically not made for purely technical reasons (unlike the use of open market operations for defensive purposes and changes in the discount rate to align it with other yields), changes in the reserve requirement are usually easy to interpret. A cut in the reserve requirement can usually be interpreted to signal an easing in the basic posture of monetary policy. Hence, if the central bank strongly desires to communicate a policy change to the public, this tool may be superior to the other tools. However, it is difficult to see how this instrument would be as effective as a public statement of policy intent. The use of any type of sign language in place of verbal language is difficult to rationalize. d. Potential use in an emergency 　　At times when other tools cannot do the job, changes in the reserve requirement may be needed to neutralize major changes in the monetary base. In time of war, for instance, the government generally finances an increased level of expenditures by issuing short-term and long-term securities. To assist the Treasury in financing the effort without incurring exorbitant interest expense, the central bank may help by purchasing significantly larger than normal quantities of securities on the open market. Although this helps the Treasury, it also paves the way for an inflationary expansion of credit and money, because it directly expands bank reserves and the monetary base. In this case, the open market securities purchase could be combined with an increase in reserve requirements to avoid triggering a multiple expansion of deposits in the banking system. That is, as the monetary base is expanded by the central bank’s security purchases, the money supply multiplier would be reduced by the increase in required reserves and r. In this way, money supply growth could be limited to a rate consistent with the central bank’s overall objectives. 　　(2) Disadvantages of the reserve requirement 　　Many bankers would like to see the central bank abandon the use of the reserve requirement instrument as a regular tool of monetary policy. And many economists would agree, primarily on the basis that in most instances, the central bank’s objectives can be achieved more easily and smoothly via other policy instruments. A couple of points have been raised in support of the view that the level of reserve requirement should remain fixed over time and that the central bank should accomplish its aims through its other policy tools. We will now examine the disadvantages of the reserve requirement tool.