Net Free Reserves

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.

RELATED TERMS
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  2. Free Reserves

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  3. Reserve Requirements

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  5. Reserve Ratio

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  6. Reservable Deposit

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RELATED FAQS
  1. What do banks do to control the bank reserve?

    Understand what the Federal Reserve does in order to expand or contract the economy. Learn what depository institutions can ... Read Answer >>
  2. Why do commercial banks borrow from the Federal Reserve?

    Learn how commercial banks borrow from the Federal Reserve to meet minimum reserve requirements, and discover the pros and ... Read Answer >>
  3. How are bank reserve requirements determined and how does this affect shareholders?

    Learn how bank reserve requirements are determined and how bank reserves affect shareholders through improved bank stability ... Read Answer >>
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    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
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