RESERVE REQUIREMENTS: Rules by the Federal Reserve System governing the amount of bank reserves that banks must keep to back up their deposits. Legal reserve requirements came about because banks that practice fractional-reserve banking are sometimes inclined to make too many interest-paying loans and neglect to keep enough reserves on hand to pay their depositors. In principle, the Fed can alter reserve requirements to control the money supply. In practice, however, the Fed prefers to use open market operations or the discount rate.

     See also | Federal Reserve System | bank reserves | reserves | fractional-reserve banking | bank panic | money supply | open market operations | discount rate | monetary policy | Federal Open Market Committee | required reserves |

RESERVE REQUIREMENTS, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: April 28, 2025].

Additional information on this term can be found at:

WEB*pedia: reserve requirements

Back to the GLOSS*arama

The branch of economics that studies the entire economy, especially such topics as aggregate production, unemployment, inflation, and business cycles. It can be thought of as the study of the economic forest, as compared to microeconomics, which is study of the economic trees.

Complete Entry | Visit the WEB*pedia

Today, you are likely to spend a great deal of time at an auction wanting to buy either shoe laces for your snow boots or a rim for your spare tire. Be on the lookout for jovial bank tellers.
Your Complete Scope

This isn't me! What am I?

-- Auguste Rodin, Sculptor

User Feedback