Contracting and Reserve requirements: Difference between pages
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''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. | |||
== See also == | == See also == | ||
* [[ | * [[Monetary policy]] | ||
Revision as of 12:28, 3 August 2014
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.
