Reserve Requirements

Reserve requirements are the amounts of cash that banks must keep in their vaults or at the nearest Federal Reserve branch to meet client deposits. Reserve requirements set by the Fed's board of governors are one of the three primary tools of monetary policy, the other two being open market operations and the discount rate. The Federal Reserve Board stated on March 15, 2020, those reserve requirements ratios will be adjusted to 0% beginning March 26, 2020. Before the change, which took effect on March 26, 2020, the reserve requirement ratios on net transaction accounts varied depending on the institution's number of net transaction accounts.