Net Borrowed Reserves

AAA

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

    A statistic released in weekly Federal Reserve data showing the ...
  3. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  4. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
  5. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  6. Fractional Reserve Banking

    A banking system in which only a fraction of bank deposits are ...
Related Articles
  1. Breaking Down The Fed Model
    Bonds & Fixed Income

    Breaking Down The Fed Model

  2. How The U.S. Government Formulates Monetary ...
    Personal Finance

    How The U.S. Government Formulates Monetary ...

  3. Get To Know The Major Central Banks
    Forex Education

    Get To Know The Major Central Banks

  4. How The Federal Reserve Was Formed
    Personal Finance

    How The Federal Reserve Was Formed

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center