Browse Economics

Reserve Requirements and Bank Liquidity Ratios

Central banking terms for reserve ratios, cash reserve ratios, statutory liquidity ratios, borrowed reserves, and liquid-asset mandates.

Reserve Requirements and Bank Liquidity Ratios covers central-bank institutions, reserve systems, money aggregates, liquidity facilities, and policy tools that affect interest rates, bank funding, currencies, and financial-market conditions.

Use these pages when a finance question depends on a policy rate, reserve requirement, central-bank balance sheet, liquidity operation, money-supply measure, or official monetary institution. It sits inside Reserves, Liquidity, and Bank Requirements, so readers can move up when the broader economics context matters.

Use the table below to choose the narrower economics branch before applying a term to a model, credit view, market interpretation, policy conclusion, or risk review. Move into the term page when the evidence source, calculation, institution, market convention, or risk exposure matters.

What This Branch Covers

AreaUse it for
Borrowed ReserveBorrowed Reserve refers to funds borrowed by member banks from a Federal Reserve Bank to maintain required reserve ratios.
Cash Reserve Ratio (CRR)The cash reserve ratio is the share of deposits banks must hold as cash or central bank balances rather than lend out.
Fractional Reserve BankingFractional reserve banking lets banks hold part of deposits as reserves while lending the rest, creating credit and deposits.
Mandatory Liquid AssetsMandatory liquid assets are required holdings of cash or highly liquid securities used to support bank liquidity and depositor confidence.
Reserve RatioA reserve ratio is the fraction of deposits or liabilities a bank must hold as reserves instead of lending or investing.
Statutory Liquidity Ratio (SLR)The Statutory Liquidity Ratio (SLR) is a mandatory reserve requirement that banks must maintain in the form of liquid assets such as cash, gold, or approved securities.

What to Check

  • Central bank or monetary authority.
  • Policy rate, reserve rule, facility, account, or money aggregate.
  • Announcement date, operating date, and effective date.
  • Eligible institution, instrument, collateral, or reserve base.
  • Expected effect on yields, liquidity, credit, or exchange rates.

Common Mistakes

  • Confusing a policy announcement with an executed market operation.
  • Treating money aggregates as direct forecasts of inflation or asset returns.
  • Ignoring jurisdiction-specific central-bank mandates and operating frameworks.
  • Using rate labels without checking target, corridor, reserve, and facility mechanics.

Central-bank terms are educational context; they are not rate forecasts or recommendations to borrow, lend, trade, or invest.

In this section

Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.

Borrowed Reserve

Borrowed Reserve refers to funds borrowed by member banks from a Federal Reserve Bank to maintain required reserve ratios.

Cash Reserve Ratio (CRR)

The cash reserve ratio is the share of deposits banks must hold as cash or central bank balances rather than lend out.

Fractional Reserve Banking

Fractional reserve banking lets banks hold part of deposits as reserves while lending the rest, creating credit and deposits.

Mandatory Liquid Assets

Mandatory liquid assets are required holdings of cash or highly liquid securities used to support bank liquidity and depositor confidence.

Reserve Ratio

A reserve ratio is the fraction of deposits or liabilities a bank must hold as reserves instead of lending or investing.

Statutory Liquidity Ratio (SLR)

The Statutory Liquidity Ratio (SLR) is a mandatory reserve requirement that banks must maintain in the form of liquid assets such as cash, gold, or approved securities.

Revised on Sunday, June 21, 2026