|
|
Article: Reserve requirements: history, current practice, and potential reform.
- Article from:
- Federal Reserve Bulletin
- Article date:
- June 1, 1993
- Author:
CopyrightCOPYRIGHT 1993 Board of Governors of the Federal Reserve System. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
Joshua N. Feinman, of the Board's Division of Monetary Affairs, prepared this article. Jana Deschler and Christoph Hinkelmann provided research assistance.
Laws requiring banks and other depository institutions to hold a certain fraction of their deposits in reserve, in very safe, secure assets, have been a part of our nation's banking history for many years. The rationale for these requirements has changed over time, however, as the country's financial system has evolved and as knowledge about how reserve requirements affect this system has grown. Before the establishment of the Federal Reserve System, reserve requirements were thought to help ensure the ...