We know that required reserves are the reserves that central bank requires banks to hold in reserves.

Reserves= Required Reserves +Excess reserves.

But I see that in 2017 Total Reserves (RESBALNS) = 2000 Billion whilst Required Reserves (RESBALREQ) are only 124 Billion.

If required reserves are so low how could changing it possibly effect anything? Am I not using the right indicators?


The world changed in 2008, and commercial banks substantially increased their reserves held at the central banks in many countries including the US, mainly because they did not want to lend to each other in the unsecured interbank market

At that point, required reserves failed as a policy measure for fine-tuning money markets in many countries, since it amounted to pushing on a piece of string; the Bank of England removed them entirely in 2009. Several central banks moved to alternative instruments, including:

  • quantitative easing
  • interest on excess reserves (in the US they were small and positive but some cases such as Euroland the equivalent could be negative)
  • bank capital ratios, as a solvency regulation
| improve this answer | |

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.