reserve requirement


Amount of money and liquid assets that Federal Reserve System member banks must hold in cash or on deposit with the Federal Reserve System, usually a specified percentage of their demand deposits and time deposits. also called Federal Reserve requirement and reserve ratio.

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Thankfully the reserve requirement was high enough that there was a sense of security, despite the otherwise uncertain mood in the market regarding banks.

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In these uncertain economic time, it's nice to know that the reserve requirement still in place so that we know that at least some of our money is insured.

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In a small town located in the outskirts of Nebraska, its main bank was not granting many loans to its citizens because its reserve requirement had to be 10% which meant it had to keep at least ten million in its Federal Reserve account. As a result, business started to slow down. To help spur business, the state of Nebraska reduced the bankïs reserve requirement to 8% which gave the bank the flexibility to give out more loans.

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working reserves excess reserves