Individual Bank Reserve Management
Reserve requirement regulations, and the actions that banks take to satisfy these rules in their reserve management decisions have important monetary policy implications. For this reason, it is not surprising that a particular reserve accounting regime generates a great deal of interest. This article will examine the bank reserve management process both under the new, contemporaneous reserve requirement regime (CRR, in effect since February 1984), and the previous system. Additionally, the potential implications of the change in the reserve accounting system for the environment in which banks make their reserve management decisions will be discussed.
