The portion (expressed as a percent) of depositors" balances banks must have on hand as cash. This is a requirement determined by the country"s central bank, which in the U.S. is the Federal Reserve. The reserve ratio affects the money supply in a country.This is also referred to as the "cash reserve ratio" (CRR).

For example, if the reserve ratio in the U.S. is determined by the Fed to be 11%, this means all banks must have 11% of their depositers' money on reserve in the bank. So, if a bank has deposits of $1 billion, it is required to have $110 million on reserve.Bank Of Canada - BOC

Central Bank

Federal Reserve Board - FRB

Federal Reserve System

Fractional-Reserve Banking

Monetary Policy

Multiplier Effect

Reserve Requirements