Legal Reserve Requirements.

We have mentioned that banks are required to hold a minimum amount as non-interest-bearing reserves. Table 26-3 shows’ current reserve requirements along with the Fed’s  discretionary power to change reserve requirements. The key concept is the level of required ratios. They range from 10 percent against check able deposits down to zero for personal savings accounts. . For convenience in our numerical examples, we use 10 percent reserve ratios, with the understanding that the actual ratio may differ from 10 percent from time to time.

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