Borrowed reserves

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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 ?
[e.sub.BR] = [beta][e.sub.FFR] + [[micro].sup.b] (borrowed reserve demand)
In the day-to-day conduct of open market operations, this change was manifested in a shift of focus from a nonborrowed reserve target to a borrowed reserve target.
The approach in the United States shifted in 1982, when the Federal Reserve moved to a borrowed reserve target from a policy of targeting the growth of nonborrowed reserves in response to the high variability of the Federal funds rate over the preceding years.
It is widely believed that the Federal Reserve (Fed) continues to employ the borrowed reserve operating procedure originally implemented in October 1982.
The downward rotation of the borrowed reserve supply function illustrates how the Federal Reserve lowered the nonpecuniary cost of borrowing from the discount window during the crisis.
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." Journal of Banking and Finance, 2001, 25(9), pp.
(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. Unfortunately, since the authorities could not always rely upon private markets to extend borrowed reserves, the high and volatile risk premium and/or credit rationing in external borrowing had a severe adverse effect on the domestic financial market.
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.