Say I deposit 200 dollars in the bank and 20 dollars is set aside for the required reserves. Other customers also deposit money and more money goes into the required reserves.

If I go and get the 200 dollars back, can the bank take money from the required reserves, or can that not be touched unless a bank run occurs?


When you get your \$200 back, the bank's required reserves go down by \$20 as well, so the bank can take that amount back from its reserves.

Operationally, the bank wouldn't go to the central bank and get this, as they probably would have \$200 in cash laying around already.

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  • $\begingroup$ But 20 dollars isn't enough to get the $200 back, can the bank take more from the required reserves and assume that they can replenish it when more deposits come in? $\endgroup$ – Chris Mason Dec 16 '19 at 22:23
  • $\begingroup$ The bank can take more from the required reserve if they have excess reserve. Usually banks wouldn't keep excess reserve though, as they're better off investing in liquid assets. $\endgroup$ – Art Dec 17 '19 at 2:33

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