Wednesday Scramble

AAA

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.

INVESTOPEDIA EXPLAINS '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. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds ...
  3. Reserve Requirements

    Requirements regarding the amount of funds that banks must hold ...
  4. Reserve Ratio

    The portion (expressed as a percent) of depositors' balances ...
  5. Fractional Reserve Banking

    A banking system in which only a fraction of bank deposits are ...
  6. Treasury Direct

    The online market where investors can purchase federal government ...
Related Articles
  1. Personal Finance

    How The U.S. Government Formulates Monetary ...

  2. Fundamental Analysis

    Understanding The Federal Reserve Balance ...

  3. Economics

    What's the highest year-over-year inflation ...

  4. Economics

    What are the main components of the ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center