Do federal reserve banks have to keep the minimum cash reserves that they require other banks to keep on hand?

by economy on 22/09/09 at 4:39 am

The Fed imposes reserve requirements on most financial institutions. Are federal reserve branches obligated to keep the same ratio of cash on hand as, say, commercial banks?

The Fed imposes reserve requirements on most financial institutions.

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One Comment

gray shadow

Sep 22nd, 2009

No not really

Private banks have a legal minimum reserve they have to maintain and can lend out the rest.

Federal Reserve Banks are subject to regulations that require them to meet the banking demands of their districts.
Federal Reserve Banks tend to keep close to 97%+ of the member banks deposits on hand.

For instance, take a look at the Federal Reserve balance sheet: http://www.federalreserve.gov/releases/h41/20071129/. They hold $14B in deposits from institutions but have only $55M in loans banks (out of a total $800B in assets)

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