Reserves

1.

Accounting.

Reserves represent the amount of money ‘owed’ to the owner (shareholder) of the company.

In a profitable and conservative company, reserves will normally comprise a significant balance of accumulated undistributed profits.

2.

Banking.

Deposits maintained by non-central bank monetary financial institutions with their central bank in the latter's capacity as 'the bankers' bank'. Central banks may require institutions to maintain minimum balances with the central bank, in which case balances in excess of the minimum are known as 'excess reserves'.

Of course banks publish accounts and use the term in the accounting sense also - do not be confused by this.

See also

• Conservative
• Equity
• Interest on excess reserves
• Merger reserve
• Official reserves
• Reserve requirements
• Shareholder
• Special drawing rights
• Trapped cash