Primary Reserves


DEFINITION of 'Primary Reserves'

The minimum amount of cash required to operate a bank. Primary reserves also include the legal reserves that are housed in a Federal Reserve or other correspondent bank. Checks that have not been collected are included in this amount as well.

BREAKING DOWN 'Primary Reserves'

Primary reserves are kept in order to cover unexpected major withdrawals or runs of withdrawals. They serve as a defense against a substantial reduction in liquidity. These reserves must be kept more liquid than secondary reserves, which may be invested in marketable securities such as Treasury offerings.

  1. Secondary Reserves

    Assets that are invested in safe, marketable, short-term securities ...
  2. Lagged Reserves

    A method of bank reserve calculation whereby the financial institution ...
  3. Proved Reserves

    A classification used in mining sectors that refers to the amount ...
  4. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  5. Correspondent

    The name given to a bank, broker, dealer, or financial institution ...
  6. Excess Reserves

    Capital reserves held by a bank or financial institution in excess ...
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