To stabilize the banking system and control the supply of money, the Federal Reserve requires all banks to maintain a reserve

Question

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The Federal Reserve requires all banks to maintain a reserve either in currency or deposits with a Federal Reserve bank in order to control the money supply and stabilize the banking system. This reserve requirement helps to ensure that banks have enough money on hand to meet their customers' demands and to prevent them from becoming insolvent or going bankrupt. The reserve requirement is set by the Federal Reserve and can be adjusted from time to time to help manage the economy.

To Stabilize the Banking System and Control the Supply of Money