Borrowed reserves

Borrowed reserves

Funds borrowed from a Federal Reserve Bank by member banks to maintain the required reserve ratios.

Borrowed Reserves

Money that a member bank of the Federal Reserve System borrows from its Federal Reserve bank in order to maintain its required reserves. The interest rate on borrowed reserves is an important benchmark interest rate.
References in periodicals archive ?
While the quantum has increased, the quality of reserves too has improved, as the bulk of the reserve growth has been through earned reserves as opposed to borrowed reserves, reversing previous trends.
In addition, the expected cost of holding reserves tends to be quite modest and relatively stable: the holding costs (or "carry costs") of borrowed reserves is the (typically small) margin between the government's foreign currency borrowing cost relative to the return on foreign currency paper held.
The Federal Reserve's Operating Procedures, Nonborrowed Reserves, Borrowed Reserves and the Liquidity Effect.
The Central Bank does not have a separate item 'bank reserves' but an account which describes overall deposits without reference to beneficiaries and no distinction between reserves and borrowed reserves.
This would have led to an increase in the proportion of owned reserves, which would have reduced the country's vulnerability to abrupt changes in the availability of borrowed reserves.
Acting City Administrator Jamon Kent last week had urged the council to cut spending by $400,000 between now and June 30 in an attempt to repay borrowed reserves and close a spending gap estimated at nearly $800,000.
More to the point, 30 or more years' experience of a federal funds rate above the discount rate has shown no tendency for borrowed reserves to replace nonborrowed reserves because the Reserve Banks guarded against arbitrage.
CEE argue, using as an example Goodfriend's (1983) model of borrowed reserves, that theory suggests an effect of nbr on borrowed reserves, and they present empirical evidence that nbr affects borrowed reserves contemporaneously.
With nonborrowed reserves ignored, all reserves were borrowed reserves [R.
Tindall and Spencer [1997] presented a dynamic stochastic theory of borrowed reserves that explained the observed nonlinear relationship between borrowing and the spread between the federal funds rate and the discount rate.
6) In contrast, if the Federal Reserve implements policy by targeting nonborrowed reserves, as was the case from 1979 to 1982, or borrowed reserves as was the case from 1982 to 1988, the discount rate can play a more prominent role.
Also, with at least a six-quarter lag, an inverse relation probably exists between production starts and borrowed reserves (credit availability).