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

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

  2. Understanding The Federal Reserve Balance ...
    Fundamental Analysis

    Understanding The Federal Reserve Balance ...

  3. Banquo’s Grain And U.S. Interest Rates
    Economics

    Banquo’s Grain And U.S. Interest Rates

  4. Successful Ways That Governments Reduce ...
    Economics

    Successful Ways That Governments Reduce ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center