Reserve Requirements

What Does Reserve Requirements Mean?
Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve bank.

Also known as "required reserves".

Investopedia explains Reserve Requirements
Set by the Fed's board of governors, reserve requirements are one of the three main tools of monetary policy. The other two tools are open market operations and the discount rate.

Related Terms

Bank Run
Discount Rate
Federal Funds Rate
Federal Reserve Bank
Federal Reserve Board - FRB
Federal Reserve Open Market Committee - FOMC
Fractional-Reserve Banking
Monetary Policy
Multiplier Effect
Open Market Operations
More Related Terms

Related Links

The Federal Reserve - Few organizations can move the market like the Federal Reserve. As an investor, it's important to understand exactly what the Fed does and how it influences the economy.
The Federal Reserve's Fight Against Recession - Find out what tools the Fed has at its disposal to fight the good fight.
Compare Local Interest Rates - Search and compare the best checking and savings rates nationwide from Bankrate.com. Click Here!
How do central banks acquire currency reserves and how much are they required to hold?
How do central banks inject money into the economy?

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