reserve requirements



  • plural noun the proportion of bank deposits which a bank is required by law to keep in cash or on deposit with a central bank


  • The lowest sum of cash or other highly liquid equivalents that deposit-taking financial institutions are legally required to set aside to protect the safety of the banking system. Reserve requirements can be used to provide liquidity in case of a bank run or they can be relaxed if more cash needs to be circulating within an economy for its health and growth.