Reserve requirements: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Expand, from The Treasurer, May 2015, p15, Jeremy Warner.) |
(Add links.) |
||
| (6 intermediate revisions by one other user not shown) | |||
| Line 1: | Line 1: | ||
''Banking''. | ''Banking''. | ||
The minimum ratio of vault cash and balances ('[[reserves]]') with the [[central bank]] to deposits taken by the bank that the central bank requires commercial banks to hold. | The minimum ratio of vault cash and balances ('[[reserves]]') with the [[central bank]] to deposits taken by the bank that the central bank requires commercial banks to hold. | ||
| Line 12: | Line 12: | ||
== See also == | == See also == | ||
* [[Capital adequacy]] | |||
* [[Central bank]] | |||
* [[Commercial bank money]] | |||
* [[Fractional reserve banking]] | |||
* [[100% reserve banking]] | |||
* [[Monetary policy]] | * [[Monetary policy]] | ||
* [[Interest on excess reserves]] | |||
* [[Open market operations]] | |||
* [[RRR]] | |||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:Corporate_finance]] | |||
[[Category:Financial_products_and_markets]] | |||
[[Category:Identify_and_assess_risks]] | |||
[[Category:Investment]] | |||
[[Category:Long_term_funding]] | |||
[[Category:Manage_risks]] | |||
[[Category:Risk_frameworks]] | |||
[[Category:The_business_context]] | |||
Latest revision as of 02:42, 5 February 2024
Banking.
The minimum ratio of vault cash and balances ('reserves') with the central bank to deposits taken by the bank that the central bank requires commercial banks to hold.
An increase in minimum reserve requirements will be likely to lower the supply of money in the economy as banks undertake less lending, and vice versa.
The greatest possible ratio would be 100%. This is known as '100% reserve banking'.
Any smaller ratio is known as 'fractional reserve banking'.
