It protects public deposits.
Reserve requirement
the percentage of a bank's total deposits that must be kept in its possession
reserve ratio
excess reserves
The Purpose of the United States Federal Reserve Board is that of a governing body to oversee and make important decisions to do with the Federal Reserve Bank and the United States' currency and monetary issues.
The purpose of the reserve money that a bank keeps and does not lend out is to ensure that the bank has enough funds to meet withdrawal demands from customers and to maintain stability in the financial system. This reserve requirement is set by regulatory authorities to safeguard against potential bank runs and to support overall economic stability.
will discourage aggregate demand.
Increasing the reserve requirement for banks will make less money available to borrowers and thus slow the economy's growth.
Reserve requirement
Less money in the economy.
the percentage of a bank's total deposits that must be kept in its possession
reserve ratio
Money Multiplier is inverse of Reserve Requirement. That is, m = 1/R
reserve ratio
19%
excess reserves
excess reserves