Reserve Requirement Systems in OECD Countries

58 Pages Posted: 5 Dec 2007  

Yueh-Yun C. O'Brien

Board of Governors of the Federal Reserve System - Division of Monetary Affairs

Date Written: July 23, 2007

Abstract

This paper compares the reserve requirements of OECD countries. Reserve requirements are the minimum percentages or amounts of liabilities that depository institutions are required to keep in cash or as deposits with their central banks. To facilitate monetary policy implementation, twenty-four of the thirty OECD countries impose reserve requirements to influence their banking systems' demand for liquidity. These include twelve OECD countries that are also members of the European Economic and Monetary Union (EMU) and twelve non-EMU OECD countries. All EMU countries employ a single reserve requirement system, which is treated as one entity.

The reserve requirement system for each of the twelve non-EMU countries is discussed separately. The similarities and differences among the thirteen reserve requirement systems are highlighted. The features of reserve requirements covered include: reservable liabilities, required reserve ratios, reserve computation periods, reserve maintenance periods, types of reserve requirements, calculations of required reserves, eligible assets for satisfying reserve requirements, remuneration on reserve balances, non-compliance penalties, carry-over of reserve balances, and required clearing balances.

Keywords: reservable liabilities, required reserve ratios, reserve computation periods, reserve maintenance periods, lagged reserve requirements, remuneration

JEL Classification: E4, E5

Suggested Citation

O'Brien, Yueh-Yun C., Reserve Requirement Systems in OECD Countries (July 23, 2007). FEDS Working Paper No. 2007-54. Available at SSRN: https://ssrn.com/abstract=1038201 or http://dx.doi.org/10.2139/ssrn.1038201

Yueh-Yun June C. O'Brien (Contact Author)

Board of Governors of the Federal Reserve System - Division of Monetary Affairs

20th and C Streets, NW
Washington, DC 20551
United States

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