If there is a switch from deposits to currency, the effect on the federal funds rate would be a rise in the federal funds rate.
When people switch from deposits to currency, this would lead to lower reserves in banks as people now hold more currency.
This can put banks in a problem because by law, they need to maintain a certain percentage of their reserves at the Federal Reserve and when they can't maintain this, they borrow from other banks at a rate known as the federal funds rate.
Banks will demand more reserves from other banks in order to fulfil their reserve requirements which will then lead to the federal funds rate rising. This rise will not be high however as the reserve requirement would be adjusted to take into account, the new deposit amounts that the bank holds after the deposits had switched to currency.
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