This appendix consists of three sections.  Efficiency: in this section we use the theory to characterize the optimal process of reallocation of reserve balances in the fed funds market by studying the problem of a social planner who can reallocate reserves subject to the same bilateral trading technology available to private agents and shows the equilibrium.  Data: in this section we describe the data and estimation procedures used in the quantitative implementation of the theory.  Quantitative Exercises: in this section we conduct supplementary policy experiments and robustness exercises.