Reserve Requirement
Also called: required reserves, cash reserve ratio
A reserve requirement is the fraction of deposits a bank must hold rather than lend. It was the classic textbook lever on money creation, and it is now largely obsolete: the US set it to zero in 2020, and most advanced-economy central banks steer policy through interest on reserves instead. It remains an active tool in China and several emerging markets, where it doubles as a capital-flow instrument.