Net Free Reserves

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DEFINITION of 'Net Free Reserves'

A statistic released in weekly Federal Reserve data showing the amount of money a bank holds above the required minimum. Deposit banks are required to keep a certain amount of cash on hand at all times. If banks have significantly more cash than stipulated by reserve requirements, they will lend it out.

BREAKING DOWN 'Net Free Reserves'

Net free reserves can indicate an easier credit environment and falling interest rates. Conversely, if a bank has insufficient reserves, it will borrow what it needs from the Fed, and the statistic will show net borrowed reserves, which will be expressed as a negative number.

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RELATED FAQS
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    Contrary to conventional wisdom, the Federal Reserve is extensively audited. Politicians on the left and right of a populist ... Read Full Answer >>
  2. Who decides when to print money in the US?

    The U.S. Treasury decides to print money in the United States as it owns and operates printing presses. However, the Federal ... Read Full Answer >>
  3. Why do some people claim the Federal Reserve is unconstitutional?

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  4. How can the federal reserve increase aggregate demand?

    The Federal Reserve can increase aggregate demand in indirect ways by lowering interest rates. Aggregate demand is a measure ... Read Full Answer >>
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    The stock market reacts to changes in the federal funds rate in various ways depending on where it is in the business cycle. ... Read Full Answer >>
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