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Reserve Requirements

   Also found in: Wikipedia 0.01 sec.
Reserve requirements
The percentage of different types of deposits that member banks are required to hold on deposit at the Fed.

Reserve Ratios
The liquid assets that a central bank or other body mandates that a bank keep at all times. The reserve ratio is expressed as a percentage of the bank's total deposits. The reserve ratio exists to ensure that the bank is able to pay an unusually high number of withdrawals on demand accounts should that event occur. It also helps ensure that the bank does not over-leverage itself. In some countries, increasing or decreasing reserve ratios may be used to help control the money supply. See also: Basel II, Monetary Policy.


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The beauty part: That wouldn't dent bank earnings or force them to raise more capital to meet reserve requirements.
The text stresses that the banks that may operate as counterparties in monetary policy operations are those required to maintain reserve requirements and whose financial situation does not raise any reservations from the banking commission, which have not been ruled out of the real time gross settlement system for large amounts and urgent payments (ARTS) or from the delivery system for securities, and which have not been suspended from accessing monetary policy operations.
Summary: The US Dollar and the Japanese Yen stand to gain after China announced a plan to raise bank reserve requirements to 12%, trimming lending and weighing.
 
 
 
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