What is the basic calculation for a reserve?
Answers
The requirement for the reserve ratio is decided by the central bank of the country, such as the Federal Reserve in the case of the United States. The calculation for a bank can be derived by dividing the cash reserve maintained with the central bank by the bank deposits, and it is expressed in percentage.
Answer:
Reserve Ratio refers to the portion of total deposits that the commercial banks are obligated to maintain with the central bank in the form of cash reserve, and it will not be available for any commercial lending. The requirement for the reserve ratio is decided by the central bank of the country, such as the Federal Reserve in the case of the United States. The calculation for a bank can be derived by dividing the cash reserve maintained with the central bank by the bank deposits, and it is expressed in percentage.
Explanation:
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