It has been suggested that this article or section be merged with Reserve requirements. (Discuss)
The reserve ratio is the percentage of bank reserves to deposits and notes in a fractional-reserve banking system. The reserves would normally be in the form of fiat currency held in a bank vault, or with a central bank. In many countries minimum reserve ratios are enforced by government regulations (see table). Wikipedia does not have an article with this exact name. ... Reserve requirements, a tool of monetary policy, are computed as percentages of deposits that banks must hold as vault cash or on deposit at the central bank (in the United States in a Federal Reserve Bank), rather than, perhaps, lend out. ... Bank reserves are banks holdings of deposits in accounts with their central bank (for instance the European Central Bank or the Federal Reserve, in the later case called federal funds), plus currency that is physically held in banks vaults (vault cash). ... Bank deposits accounts are the large part of the money supply. They come in different types depending on withdrawal restrictions. ... In economics, particularly in financial economics, fractional-reserve banking is the near-universal practice of banks retaining only a fraction of their clients deposits and notes as reserves to satisfy demands for withdrawals, investing the remainder in loans to generate income. ... Fiat currency or fiat money is money issued by government fiat i. ... A bank vault or strongroom is usually a (very) large safe built into (or under) the fabric of a bank building and in which valuables are stored. ... Government regulation involves the use of the law, mandated by the state, to produce outcomes which might not otherwise occur, prevent outcomes which might otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur. ...
The euro area (also called Eurozone, Eurosystem or Euroland) is the subset of European Union member states which have adopted the euro, creating a currency union. ...
Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.
The dollar amount of a depository institution's reserve requirement is determined by applying the reserveratios specified in the Federal Reserve Board's Regulation D to an institution's reservable liabilities (see table of reserve requirements).
The amount of net transaction accounts subject to a reserve requirement ratio of zero percent (the "exemption amount") is adjusted each year by statute.
Federal Reserve System, central banking system of the United States, popularly called the Fed. A central bank serves as the banker to both the banking community and the government; it also issues the national currency, conducts monetary policy, and plays a major role in the supervision and regulation of banks and bank holding companies.
During the 50 years before the passage of the Federal Reserve Act of 1913, surging economic growth was interrupted by economic crises, frequently accompanied by the collapse of the monetary system.
When the required reserveratio is raised, banks are unable to create as much money as they previously were able to because a larger portion of their assets must be held in reserve; the converse is true when the reserveratio is reduced.
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