Blog BanRep: Bank Reserves and Liquidity Risk Management
This new Blog entry analyzes bank reserves as a key monetary policy tool for managing liquidity risks in the financial system, their impact on financial institutions, and their role in the country's economic stability.
Publication Date:
Friday, 25 October 2024
12:54
Bank reserves are an economic policy instrument traditionally overseen by central banks that requires banks and other credit institutions to maintain a reserve of liquid assets in cash or in their accounts at the Central Bank. The reserve ratio is the ratio of these bank reserves to public deposits. The graph below exhibits the notable reduction in this ratio in recent decades, particularly since the 1990s.
