Definition: Rules specifying reserves a depository institution must hold against covered liabilities. Older monetary-policy explanations often discuss raising or lowering these ratios to influence credit.
Example
A textbook illustrates how a required reserve percentage would affect funds held against deposits.
Keep the distinction clear
The Federal Reserve reduced reserve-requirement ratios to zero effective March 26, 2020. As of October 2026, its published requirements remain zero. This does not eliminate bank capital, liquidity, or risk-management requirements.
Related terms
Monetary Policy · Open Market Operations · Demand Deposit
Keep studying
Primary and Secondary Mortgage Markets: Fannie Mae, Freddie Mac, and Ginnie Mae
References: Federal Reserve: reserve requirements
Pronunciation (US): ree-ZURV ree-KWYRE-munts (capitals show stress)
Pronunciation reference: Merriam-Webster
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