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excess reserves
(redirected from Excess reserve)

   Also found in: Wikipedia 0.03 sec.
Excess reserves
Amount of reserves held by an institution in excess of its reserve requirement and required clearing balance. Also see reserves.

Excess reserves
Actual reserves that exceed required reserves.

excess reserves
The reserves held by banks and thrifts in excess of what is required by the Federal Reserve. Large excess reserves indicate a potential for credit expansion and reduced interest rates that could prove beneficial to the security markets. Conversely, small excess reserves indicate reduced possibilities for credit expansion and a relatively tight monetary policy by the Federal Reserve. Compare required reserves.

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At a five percent reserve requirement, a one-million dollar excess reserve allows a bank to extend twenty million dollars in new credits.
Nonetheless, the funds rate will firm if the level of balances falls so low that some banks have difficulty finding sufficient funds to cover late-day deficits in their Federal Reserve accounts, and the rate will soften if balances are so high that some banks risk ending a period holding unusable excess reserve balances.
Ballantyne Re issued the notes to finance excess reserve requirements under Regulation XXX for the ceded block of business.
 
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