DEFINITION of 'Net Free Reserves'

Net Free Reserves was a statistic that was released in Weekly Federal Reserve data showing the amount of money a bank holds above the required minimum. Deposit banks are required to keep a certain amount of cash on hand at all times. If banks have significantly more cash than stipulated by reserve requirements, they will lend it out. The Fed stopped publishing this data in 2013.

BREAKING DOWN 'Net Free Reserves'

Net free reserves can indicate an easier credit environment and falling interest rates. Conversely, if a bank has insufficient reserves, it will borrow what it needs from the Fed, and the statistic will show net borrowed reserves, which will be expressed as a negative number.

RELATED TERMS
  1. Bank Reserve

    A bank reserve is the currency deposit which is not lent out ...
  2. Federal Funds

    Federal funds are excess reserves that commercial banks deposit ...
  3. Regulation I

    Regulation I is a regulation stipulating that any bank that becomes ...
  4. Possible Reserves

    Possible reserves are an estimate of the amount of oil or natural ...
  5. Federal Reserve Bank Of New York

    The Federal Reserve bank that is responsible for the second district ...
  6. Contemporaneous Reserves

    Contemporaneous reserves are a form of bank reserve accounting ...
Related Articles
  1. Insights

    How the Federal Reserve Manages Money Supply

    The Federal Reserve was created to help reduce the injuries inflicted during the slumps and was given some powerful tools to affect the supply of money.
  2. Financial Advisor

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  3. 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.
  4. Personal Finance

    What is Fractional Reserve Banking?

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

    How the Federal Reserve Affects Your Mortgage

    The Federal Reserve can impact the cost of funds for banks and consequently for mortgage borrowers when maintaining economic stability.
  6. Insights

    The Federal Reserve System Affects You More Than You Might Think

    How does the Federal Reserve System affect ordinary citizens? In more ways than you might realize.
  7. Trading

    How The Federal Reserve Was Formed

    Find out how this institution has stabilized the U.S. economy during economic downturn.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What happens if the Federal Reserve lowers the reserve ratio?

    Learn about the Federal Reserve's monetary policy and the tools it uses to control it. Understand what happens if the Federal ... Read Answer >>
  4. Who decides when to print money in the U.S.?

    Learn the U.S. Treasury's Federal Reserve Bank's roles in the process of printing money in the United States. Read Answer >>
  5. Who determines interest rates?

    Learn who determines interest rates. In countries using a centralized banking model, interest rates are determined by the ... Read Answer >>
Hot Definitions
  1. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  2. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  3. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  4. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  5. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  6. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
Trading Center