Work out cash reserve requirement instantly with clear inputs, formula shown and shareable results.
Banks must keep a share of deposits as non-interest-bearing reserves with the central bank. Because those funds cannot be lent, the requirement acts as a tax on deposits and directly widens the margin banks need to charge.
Cash reserve
Reserve = liabilities × ratio; opportunity cost = reserve × lending rate
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
To control money creation and to ensure a minimum settlement liquidity buffer in the system.
In some jurisdictions yes, but traditionally the cash reserve earns nothing, which is why it is costly.