DEFINITION of 'Lagged Reserves'

A method of bank reserve calculation whereby the financial institution is required to keep a certain level of reserves with a Federal Reserve bank. The amount of reserves required is based on the value of all outstanding deposits in the bank's demand deposit accounts from two weeks prior.

BREAKING DOWN 'Lagged Reserves'

Lagged reserve calculation was used from the late 1960s until 1984, when contemporaneous calculations were implemented. But the Fed decided to revert back to the lagged calculation in 1998 in order to obtain more accurate data. This type of reserve calculation is still being used today.

  1. Contemporaneous Reserves

    A form of bank reserve accounting that requires a bank to maintain ...
  2. Reserve Requirements

    Reserve requirements refer to the amount of cash that banks must ...
  3. Reservable Deposit

    A bank deposit subject to reserve requirements. Reserve requirements ...
  4. Reserve Ratio

    The portion (expressed as a percent) of depositors' balances ...
  5. Working Reserves

    Reserves held by banks above the required minimum level - or ...
  6. Wednesday Scramble

    Last-minute buying and selling of eligible reserves that takes ...
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