The percentage of cash that banks are required to maintain for immediate withdrawal by customers is referred to as the ______.

Question

Quizplus · Accepted Answer

The reserve requirement is the percentage of cash that banks are legally required to maintain for immediate withdrawal by customers. This is set by the central bank of the country as a means of regulating the amount of money in circulation and promoting financial stability. Option A refers to the buying and selling of government securities by the central bank, option B refers to a tool for providing liquidity to banks, and option C refers to the interest rate at which banks can borrow from the central bank.

The Percentage of Cash That Banks Are Required to Maintain