A historical assessment of the rationales and functions of reserve requirements

Marvin Goodfriend and Monica Hargraves

No 83-01, Working Paper from Federal Reserve Bank of Richmond

Abstract: Laws requiring banks to hold a volume of reserves equal to a prescribed fraction of their deposits originated in this country more than a century ago. Since then both the financial system and the rationales supporting reserve requirements have changed considerably. Nevertheless, the practice of requiring reserves has continued without interruption. This article examines the history and function of reserve requirements at the national level and assesses the validity of various prominent reserve requirement rationales.

Keywords: Bank reserves; Federal Reserve System (search for similar items in EconPapers)
Date: 1983
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Citations: View citations in EconPapers (21)

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Journal Article: A historical assessment of the rationales and functions of reserve requirements (1983)
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