The required ratio of funds that commercial banks and other depository institutions must hold in reserve against deposits

A reduction in the amount of money that is used for lending that reduces the money multiplier. It is caused by banks choosing to hold excess reserves and from individuals, businesses, and foreigners choosing to hold more cash

The percentage of a bank’s total deposits that are held in reserves, either as cash in the vault or as deposits at the regional Federal Reserve Bank

The interest rate the Federal Reserve charges commercial banks and other depository institutions to borrow reserves from a regional Federal Reserve Bank

The interest rate financial institutions charge each other for overnight loans used as reserves

The buying and selling of U.S. government securities, such as Treasury bills and bonds, to adjust reserves in the banking system

A twelve-member committee that is composed of members of the Board of Governors of the Fed and selected presidents of the regional Federal Reserve Banks. It oversees open market operations (the buying and selling of government securities), the main tool of monetary policy

Describes a banking system in which a portion of bank deposits are held as vault cash or in an account with the regional Federal Reserve Bank, while the rest of the deposits are loaned out to generate the money creation process

The central bank of the United States

Measures the potential or maximum amount the money supply can increase (or decrease) when new deposits enter (exit) the system and is defined as 1 divided by the reserve requirement. The actual money multiplier will be less, because some banks hold excess reserves

Reserves held by banks above the legally required amount

A situation when a bank’s liabilities exceed its assets