Wednesday Scramble


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.

  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. Fractional Reserve Banking

    A banking system in which only a fraction of bank deposits are ...
  5. Reserve Ratio

    The portion (expressed as a percent) of depositors' balances ...
  6. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
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