Reserve Requirement

Reserve Requirement means minimum amount of money or cash-equivalents that banks along with depository institutions (credit unions, insurance companies) are expected by law to maintain on hand, and which is probably not used for loaning or investing. Reserve requirement assist as (1) some sort of safeguard against intense and inordinate require for withdrawals (as in run on bank) and (2) to be a control mechanism for injecting cash, or withdrawing that from, an economic climate.