A Historical Assessment of the Rationales and Functions of Reserve Requirements

20 Pages Posted: 24 Aug 2012

See all articles by Marvin Goodfriend

Marvin Goodfriend

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

Monica Hargraves

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 1983

Abstract

Laws 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.

Suggested Citation

Goodfriend, Marvin and Hargraves, Monica, A Historical Assessment of the Rationales and Functions of Reserve Requirements (January 1, 1983). FRB Richmond Working Paper No. 83-1. Available at SSRN: https://ssrn.com/abstract=2117964 or http://dx.doi.org/10.2139/ssrn.2117964

Marvin Goodfriend (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Monica Hargraves

affiliation not provided to SSRN

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