Bank reserves are banks' holdings of deposits in accounts with their central bank (for instance the European Central Bank or the Federal Reserve, in the latter case including federal funds), plus currency that is physically held in bank vaults (vault cash). The central banks of some nations set minimum reserve requirements. Even when no requirements are set, banks commonly wish to hold some reserves, called desired reserves, against unexpected events.

The Bank of England uses the term rest to describe the same concept.

[edit] Terms

• Excess reserves - bank reserves in excess of the reserve requirement.
• Free reserves - the margin by which excess reserves exceed borrowings. (Vogel 2001:421)[1]

[edit] See also

• Gold reserve
• Monetary base
• Reserve requirement

[edit] References

Vogel, Harold L. (2001). Entertainment Industry Economics: A Guide for Financial Analysis. New York: Cambridge University Press. ISBN 0521792649