Reserve ratios

(redirected from Required Reserve Rate)

Reserve ratios

Specified percentages of deposits, established by the Federal Reserve Board, that banks must keep in a noninterest-bearing account at one of the twelve Federal Reserve Banks.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
According to the Council, the already implemented cuts in the NBP interest rates together with the lowering of the required reserve rate will support return of the economy to the potential growth path.
The central bank left its main interest rate unchanged, but cut the required reserve rate for commercial banks.
One of the bank's policy makers, Dariusz Filar, said that the bank may need to cut the required reserve rate for banks in two 0.75 percentage-point steps.
Another option is to elevate the required reserve rates to stem the liquidity of the lira while lowering that of the dollar depot.

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