reserve requirements
Definition
Minimum amount of cash or cash-equivalents (computed as a percentage of deposits) that banks and other depository institutions (credit unions, insurance companies) are required by law to keep on hand, and which may not be used for lending or investing. Reserve requirements serve as (1) a safeguard against a sudden and inordinate demand for withdrawals (as in a run on a bank), and (2) as a control mechanism for injecting cash (liquidity) into, or withdrawing it from, an economy.
reserve requirements is in the Banking, Commerce & Finance and Corporate, Commercial, & General Law subjects.
reserve requirements appears in the definitions of the following terms:
deposit multiplier,
tight monetary policy,
Federal Reserve System (The Fed),
reserves requirement,
monetary policy,
required reserves,
cheap money,
total reserves,
primary reserves,
interest rate
and
This content can be found on the following page:
http://www.businessdictionary.com/definition/reserve-requirements.html
email to a friend print this definition cite this definition