What is the logic the Fed used for paying interest on reserves? During the last few years, the Fed has been paying banks interest on reserves. Its a strange policy if you want banks to invest their money in the real economy. Why did they do this? Is it a way to recapitalize the banks? Is it a way to guarantee their solvency irrespective of the availability of investment opportunities? Is it a way to limit the potential inflation of QE?
According to Bernanke himself, interest paid on reserves in excess of the penalty free upper bound are used as an additional tool with which the Fed can place a floor on the federal funds rate.The logic here is that banks have no incentive to lend in the overnight market at rates lower than this interest rate.

This link has some links to info on the topic. It's an old answer that got little attention and so here is my chance to get some use out of it :) 

Federal Reserve Interest