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.

RELATED TERMS
  1. Reserve Requirements

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

    A reservable deposit is a deposit subject to reserve requirements, ...
  3. Reserve Maintenance Period

    The reserve maintenance period is the time frame in which banks ...
  4. Lagged Reserves

    Lagged Reserves is a method of bank reserve calculation whereby ...
  5. Excess Reserves

    Excess reserves are capital reserves held by a bank or financial ...
  6. Primary Reserves

    Primary reserves are the minimum amount of cash under U.S. federal ...
Related Articles
  1. Investing

    How The U.S. Government Formulates Monetary Policy

    Learn about the tools the Fed uses to influence interest rates and general economic conditions.
  2. Insights

    How the Federal Reserve Manages Money Supply

    Find out how the Federal Reserve manages bank reserves and how this contributes to a stable economy.
  3. Insights

    What Do the Federal Reserve Banks Do?

    These 12 regional banks are involved with four general tasks: formulate monetary policy, supervise financial institutions, facilitate government policy and provide payment services.
  4. 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.
  5. Insights

    A Primer On Reserve Currencies

    For nearly a century, the U.S. dollar has served as the world's premier reserve currency, but the future is uncertain.
  6. Trading

    10 Countries With The Biggest Forex Reserves

    Without adequate reserves, a nation's economy can grind to a halt. Here are the 10 nations with the biggest forex reserves.
  7. 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.
  8. Trading

    How Inflation-Fighting Techniques Affect The Currency Market

    Central banks use these strategies to calm inflation, but they can also provide longer-term clues for forex traders.
RELATED FAQS
  1. Market operation and its effect on Money Supply

    Understand how open market operations affect the supply of money in the economy and learn the specific ways the Federal Reserve ... Read Answer >>
  2. 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 >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center