Bank Reserves - Terms

Terms

  • Reserves on deposit – deposit accounts at the central bank, owned by banks.
  • Vault cash – reserves held as cash in bank vaults rather than being on deposit at the central bank.
  • Borrowed reserves – bank reserves that were obtained by borrowing from the central bank.
  • Non-borrowed reserves – bank reserves that were not obtained by borrowing from the central bank.
  • Required reserves – the amount of reserves that banks are required to hold, determined by the central bank as a function of a bank's deposit liabilities.
  • Excess reserves - bank reserves in excess of the reserve requirement. A portion of excess reserves (or even all of them) may be desired reserves.
  • Free reserves - the amount by which excess reserves exceed borrowed reserves. (Vogel 2001:421)
  • Total reserves – all bank reserves: vault cash plus reserves on deposit at the central bank, also borrowed plus non-borrowed, also required plus excess.

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