Lagged Reserves


DEFINITION of 'Lagged Reserves'

A method of bank reserve calculation whereby the financial institution is required to keep a certain level of reserves with a Federal Reserve bank. The amount of reserves required is based on the value of all outstanding deposits in the bank's demand deposit accounts from two weeks prior.

BREAKING DOWN 'Lagged Reserves'

Lagged reserve calculation was used from the late 1960s until 1984, when contemporaneous calculations were implemented. But the Fed decided to revert back to the lagged calculation in 1998 in order to obtain more accurate data. This type of reserve calculation is still being used today.

  1. Primary Reserves

    The minimum amount of cash required to operate a bank. Primary ...
  2. Non-Borrowed Reserves

    A measure of the reserves in the banking system. Non-borrowed ...
  3. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  4. Excess Reserves

    Capital reserves held by a bank or financial institution in excess ...
  5. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
  6. Reserve Fund

    An account set aside by an individual or business to meet any ...
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