Secondary Reserves

Secondary Reserves
Assets that are invested in safe, marketable, short-term securities such as Treasury bills when the demand for loans is low. Secondary reserves provide a supplemental measure of low-risk liquidity. They earn interest and can be useful in adjusting a bank's reserve totals.

Secondary reserves are often deposited in short-term instruments that can quickly be converted to cash when additional liquidity is required. However, they are not listed separately on the balance sheet.

Secondary reserves differ from legal reserves in their ability to earn interest.

Investment dictionary. . 2012.

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