Noun: required reserve ratio
- A percentage of the bank's total deposits, kept to ensure that the bank is able to pay an unusually high number of withdrawals on demand accounts should that event occur
"The required reserve ratio is sometimes used as a tool in monetary policy, influencing the country's borrowing and interest rates by changing the amount of funds available for banks to make loans with";
- reserve ratio, cash reserve ratio
Type of: ratio
Encyclopedia: Required reserve ratio