Net Borrowed Reserves

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DEFINITION of 'Net Borrowed Reserves'

A statistic released in weekly Federal Reserve data showing the difference between the amount of money a bank has borrowed from the Fed and the cash reserves the bank holds above the required minimum. Net borrowed reserves is expressed as a negative number. Deposit banks are required to keep a certain amount of cash on hand at all times. If these banks don't have enough cash, they will borrow it from a Federal Reserve bank.

INVESTOPEDIA EXPLAINS 'Net Borrowed Reserves'

Net borrowed reserves can indicate a tight credit environment relative to the demand for loans and rising interest rates.

Conversely, if there is an excess of reserves in the banking system, the statistic will show net free reserves, which will be expressed as a positive number.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Net Free Reserves

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  3. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  4. Fractional Reserve Banking

    A banking system in which only a fraction of bank deposits are ...
  5. Tight Monetary Policy

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  6. Federal Reserve Board - FRB

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