2oii0r2017 Working Reserves Working Reserves DEFINITION of 'Working Reserves! Reserves held by banks above the required minimum level or cash reserve ratio- mandated by regulations and laws. Working reserves are normally in the form of vault currency, deposits at other banks, cash being collected and excess reserves held as deposits atthe Federal Reserve bank. Banks typically hold a buffer of working reserves to avoid their reserves falling below the minimum required level due to large net withdrawals. BREAKING DOWN ‘Working Reserves! Banks hold an optimum level of working reserves since inadequate working reserves would lead to ‘avoidable interest penalties on borrowed reserves. On the other hand, an excessively high evel of working reserves would mean foregoing substantial interest income on customer loans. Become A Day Trader In Less Than A Day “Through Investopedia Academy/s Become ADay Trader an experienced WallStreet trader willteach you proven, poftablestrategies you can tart using today. Alter this self-paced, on-demand course youll understand money management and rang psychology speak the language of the marke, and use sxprofitable, vied-anddruetrading techniques. Watch Fre Tller>> Reserve Ratio Video Definition ‘The reserve ratio isthe portion of deposttorsibainesthat banks must have on hand as cash. This is ‘2 requirement determined by the country’s central bank, which inthe United States isthe Federal Reserve. The reserve ratio affects the money supply ina country at any given time. BREAKING DOWN ‘Reserve Ratio! Ifthe Federal Reserve, for example, determined the reserve ratio to be 11%, this means all banks ‘must have 1196 of thelr depositors’ money on reserve n the bank. So, fa bankhas deposits of $1 billon, its required to have $110 milion on reserve. Read More+ hip slwwuinvestopedia.comermsiwhworking-reserves.asp 1220/0/2017 Working Reserves seach nope WORK WITH RWESTOPEDH NoowtUs AbemsaWehUe ContactUs Coes (©2017 Ivesoped, LC. lghsResned | TemsOFUse | Phar Pley hip lwwuinvestopedia.comitermsiwhworking-reserves.asp knee fin 22