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  1. Bank Reserves: Definition, Purpose, Types, and Requirements

    • Bank reserves are the cash minimums that financial institutions must have on hand in order to meet central bankrequirements. This is real paper money that must be kept by the bank in a vault on-site o… See more

    How Bank Reserves Work

    Bank reserves are primarily an antidote to panic. The Federal Reserve obliges banks to hold a certain amount of cash in reserve so that they never run short and have to refuse a cu… See more

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    History of Bank Reserves

    Despite the determined efforts of Alexander Hamilton, among others, the U.S. didn't have a national banking system for more than a couple of short periods of time until 1913, whe… See more

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    Special Considerations

    The required bank reserve follows a formula set by Federal Reserve Boardregulations. The formula is based on the total amount deposited in the bank's net transaction … See more

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    Impact of The '08 Crisis

    Until the financial crisis of 2008-2009, banks earned no interest for the cash reserves they held. That changed on Oct. 1, 2008. As part of the Emergency Economic Stabilizatio… See more

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    The Bottom Line

    The past banking system that existed in the U.S. before banks' regulation became centralized seems a bit Wild West by today's standards. Each state could charter banks, and … See more

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  2. Bank reserves are the cash minimums that financial institutions must have on hand in order to meet central bank requirements. This is real paper money that must be kept by the bank in a vault on-site or held in its account at the central bank.
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