What is the required reserve ratio?

If the Federal Reserve, for example, determined the reserve ratio to be 11%, this means all banks must have 11% of their depositors' money on reserve in the bank. So, if a bank has deposits of $1 billion, it is required to have $110 million on reserve. read more

BREAKING DOWN 'Reserve Ratio' If the Federal Reserve, for example, determined the reserve ratio to be 11%, this means all banks must have 11% of their depositors' money on reserve in the bank. So, if a bank has deposits of $1 billion, it is required to have $110 million on reserve. read more

The reserve ratio on net transactions accounts depends on the amount of net transactions accounts at the depository institution. The Garn-St Germain Act of 1982 exempted the first $2 million of reservable liabilities from reserve requirements. This "exemption amount" is adjusted each year according to a formula specified by the act. read more

The reserve requirement (or cash reserve ratio) is a central bank regulation employed by most, but not all, of the world's central banks, that sets the minimum amount of reserves that must be held by a commercial bank. read more