Bank Reserve

Bank Reserve
Bank reserves are the currency deposits which are not lent out to the bank's clients. A small fraction of the total deposits is held internally by the bank or deposited with the central bank. Minimum reserve requirements are established by central banks in order to ensure that the financial institutions will be able to provide clients with cash upon request.

The main purpose of holding reserves is to avoid bank runs and generally appear solvent. Central banks place these restrictions on banks, because the banks can earn a much larger return on their capital by lending out money to clients rather than holding cash in their vaults or depositing it with other institutions. Bank reserves decrease during periods of economic expansion and increase during recessions.


Investment dictionary. . 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • bank reserve — See reserve …   Ballentine's law dictionary

  • bank reserve — amount of cash a bank has in its vaults …   English contemporary dictionary

  • Bank — [bæŋk] noun BANKING ORGANIZATIONS The Bank the Bank of England, Britain s central bank: • The Bank is worried that strong demand for labour could lead to higher wages and prices. * * * Ⅰ …   Financial and business terms

  • reserve bank — ➔ bank1 * * * reserve bank UK US noun [C] BANKING, FINANCE, GOVERNMENT ► CENTRAL BANK(Cf. ↑central bank) …   Financial and business terms

  • bank — bank1 /bangk/, n. 1. a long pile or heap; mass: a bank of earth; a bank of clouds. 2. a slope or acclivity. 3. Physical Geog. the slope immediately bordering a stream course along which the water normally runs. 4. a broad elevation of the sea… …   Universalium

  • Bank for International Settlements — The Bank for International Settlements (or BIS) is an international organization of central banks which fosters international monetary and financial cooperation and serves as a bank for central banks. cite web… …   Wikipedia

  • bank — ▪ I. bank bank 1 noun [countable] 1. BANKING a business that makes its profit by paying interest to people who keep money there and charging a higher rate of interest to borrowers who borrow money from the bank. Different types of bank provide a… …   Financial and business terms

  • Bank of England — Bank of England …   Wikipedia

  • Reserve Bank of India — Reserve Bank of India …   Deutsch Wikipedia

  • Bank of Estonia — Eesti Pank (Estonian) …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”