WordValereserve requirement
the funds a bank must hold rather than lend
In more detail
1. (noun) the percentage of customer deposits that a bank must keep as cash or highly liquid assets and cannot lend out, as required by banking regulations
Examples
- 1. The central bank increased the reserve requirement from 10% to 12% to control inflation.
How to use reserve requirement
Reserve requirement is a technical term used in banking and monetary policy contexts. It refers to the regulatory mandate that banks must hold a certain percentage of customer deposits in the form of cash or highly liquid, safe assets rather than lending them out. This protects depositors and maintains financial system stability. The term is used by central banks, financial regulators, economists, and banking professionals.
Common phrases
- reserve requirement ratio
- meet the reserve requirement
- lower reserve requirements
- increase reserve requirements
- central bank reserve requirement
Synonyms
reserve ratio · minimum reserve requirement · cash reserve requirement · liquidity requirement
Word family
reserve (verb, noun) · requirement (noun) · reserves (plural noun)
A common mistake
Learners sometimes confuse reserve requirement with actual reserves held by a bank; a bank may hold reserves above the legal minimum required.
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