Prohibition on IOER Act of 2025

This bill proposes to amend the Federal Reserve Act to prohibit Federal Reserve banks from paying interest on excess reserves held by depository institutions. The legislation seeks to eliminate a key tool currently used by the Federal Reserve for monetary policy and managing bank liquidity. Specifically, the bill modifies Section 19(b)(12) of the Federal Reserve Act. It clarifies that earnings may only be paid on required reserve balances and introduces a new provision explicitly stating that Federal Reserve banks are forbidden from paying earnings on any other balances maintained by or on behalf of depository institutions.