Non-Borrowed Reserves

DEFINITION of 'Non-Borrowed Reserves'

A measure of the reserves in the banking system. Non-borrowed reserves represent the numerical difference between total reserves minus funds that have been borrowed from the Fed discount window.

The first element of this equation consists of the total reserves held at deposit at the Fed by member banks plus the composite cash in their vaults. The second element is money borrowed by banks through the Fed discount window.

BREAKING DOWN 'Non-Borrowed Reserves'

The total amount of non-borrowed reserves is computed each week by the Federal Reserve Bank. The level of reserves is sometimes targeted by adjusting the Fed funds rate to implement monetary policies. Although the arithmetic computation of non-borrowed reserves is quite simple, the underlying factors that sometimes affect this number can be quite complex.

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