LeoGlossary: Reserve Requirement

The amount determined by applying the reserve ratios specified in Regulation D to an institution's reserve liabilities during the relevant computation period. The institution must satisfy its reserve requirement in the form of vault cash and/or balances maintained either directly with a Reserve Bank or in a pass-through arrangement.

Regulation D imposes reserve requirements on the following:

Since the early 1990s, there was zero reserve requirement applied to nonpersonal time deposits and Eurocurrency liabilities. The only one that has the requirements are transaction accounts.

The following are the different types of transaction accounts:

• Demand deposit accounts
NOW accounts

Savings accounts are excluded from transaction accounts.


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