- How a Bank Works?
- A Bank's Income Statement
- Fractional Reserve Banking System
- Banking: Multiplier Effect and the Money Supply
- Banking: Introduction to Bank Notes
- Banking: How Bank Notes and Checks Work?
- Banking: How Banks Give Out Loans?
- Banking: Understanding Reserve Ratios
- Banking: Introduction to Leverage

# Banking: Understanding Reserve Ratios

Reserve requirements are the amount of funds that a bank must hold in reserve against specified deposit liabilities.

The dollar amount of a depository institution's reserve requirement is determined by applying the reserve ratios specified by the central bank of a country. This is also referred to as the "cash reserve ratio" (CRR).

The reserve ratio affects the money supply in a country.

This video explains the concept of reserve ratio and how reserve requirements limit how much lending a bank can do.

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