reserve requirements

Related Terms
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.

Use 'reserve requirements' in a Sentence

The bank told me how much they kept in reserve requirements and it astonished me because the number was very high.
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You should always know what the full reserve requirements are so that you do not ever go below that level.
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The reserve requirements of the bank were met as the vault contents were especially safe from potential theft so we proceeded.
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