DEFINITION of 'Wednesday Scramble'

Last-minute buying and selling of eligible reserves that takes place between U.S. banks on Wednesday, the settlement date for meeting reserve requirements as mandated by the Federal Reserve.


The reserve requirement is a central bank requirement that stipulates the minimum amount of reserves each bank must hold as a proportion of customer deposits and notes. Since the reserve requirement is calculated as an average for the reserve computation period, if many banks are short of the reserve requirement on Wednesday, a scramble for available reserves ensues.

BREAKING DOWN 'Wednesday Scramble'

A Wednesday scramble will usually have the effect of sending the federal funds rate sharply higher, due to the demand for funds. Conversely, if most banks have adequate reserves to meet the requirements and in fact may have excess reserves, the federal funds rate will drop.

RELATED TERMS
  1. Reserve Ratio

    The portion (expressed as a percent) of depositors' balances ...
  2. Reservable Deposit

    A bank deposit subject to reserve requirements. Reserve requirements ...
  3. Bank Reserve

    Bank reserves are the currency deposits which are not lent out ...
  4. Net Free Reserves

    A statistic released in weekly Federal Reserve data showing the ...
  5. Fractional Reserve Banking

    A banking system in which only a fraction of bank deposits are ...
  6. Adjustment Credit

    A short-term loan made by a Federal Reserve Bank to a smaller ...
Related Articles
  1. Investing

    How Does Reserve Work and Make Money?

    Learn what Reserve is and how it makes money through securing reservations at fine dining establishments for clients willing to pay for its premium service.
  2. Personal Finance

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  3. Personal Finance

    Explaining the Federal Discount Rate

    The federal discount rate is the rate at which eligible banks or other depository institutions can borrow funds from a Federal Reserve bank.
  4. Investing

    Explaining Capital Reserve

    Capital reserve is an account on a company’s or municipality’s balance sheet that is dedicated to money reserved for long-term or large-scale projects.
  5. Financial Advisor

    Will 2016 Bring a Bear Market?

    Timing the market is very difficult. Here are the current economic conditions that can hint at when a bear market will arrive.
  6. Insights

    How The Federal Reserve Manages Money Supply

    Find out how the Fed manages bank reserves and this contributes to a stable economy.
  7. Insights

    What's the 1913 Federal Reserve Act?

    The 1913 Federal Reserve Act was a pivotal congressional act that helped establish the Federal Reserve System as it exists today. It is one of the United States financial system’s most influential ...
  8. Trading

    Explaining the Federal Reserve System

    The Federal Reserve System is the central bank of the United States. It regulates monetary policy and supervises the nation’s banking system.
  9. Investing

    Why Countries Keep Reserve Currency

    Central banks and financial institutions hold large amounts of foreign money as their reserve currency.
  10. Insights

    Understanding How the Federal Reserve Creates Money

    Read about how the Federal Reserve actually targets and creates new money in the economy, and find out why the savings and loans system magnifies this process.
RELATED FAQS
  1. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
  2. Who determines the reserve ratio?

    Understand what the Federal Reserve is and what it regulates in the U.S. economy. Learn about the reserve ratio and how the ... Read Answer >>
  3. Why would the Federal Reserve change the reserve ratio?

    Understand the Federal Reserve's monetary policy and the tools it uses to change that monetary policy. Learn about the reserve ... Read Answer >>
  4. 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 >>
  5. What are the implications of a high Federal Funds Rate?

    Learn the implications of a high federal funds rate, which include constriction of the money supply, a stronger dollar and ... Read Answer >>
  6. Who decides when to print money in the US?

    Learn who decides to print money in the United States. Many people relate credit creation, which is the Fed's job, with printing ... Read Answer >>
Hot Definitions
  1. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  2. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  3. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
  4. Border Adjustment Tax

    A tax levied on goods based on where they are sold – exported goods are exempt from tax; those imported and sold in the ...
  5. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  6. Blind Trust

    A trust in which the trustees have full discretion over the assets, and the trust beneficiaries have no knowledge of the ...
Trading Center