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.

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.
References in periodicals archive ?
As per the reports, the Bank of Mozambique has reduced the interest rate on its permanent loan liquidity facility by 100 basis points to 12.5 percent and the required reserve rate by 25 basis points to 8 percent.
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.
Earlier, the Bank reduced its key lending rate by 50bps to 16.00% at its August meeting, after increasing the rate by 100 basis points to 16.5% at its January meeting in 2011, where it also increased the interest rate paid on deposits by 100 basis points to 5%, and increased the required reserve rate by 25 basis points to 9%.
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.

Full browser ?