A historical assessment of the rationales and functions of reserve requirements
AbstractLaws 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.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Richmond in its series Working Paper with number 83-01.
Date of creation: 1983
Date of revision:
Other versions of this item:
- Marvin Goodfriend & Monica Hargraves, 1983. "A historical assessment of the rationales and functions of reserve requirements," Economic Review, Federal Reserve Bank of Richmond, issue Mar, pages 3-21.
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