reserves - Investment & Finance Definition
Money set aside by depository institutions to meet reserve requirements. A bank may hold cash reserves in its vault or have reserves on deposit with the local Federal Reserve Bank. Reserve requirements are the minimum amount of money that a bank is required to have available to meet investors’ needs to withdraw funds. Other depository institutions that are not members of the Federal Reserve System may hold their reserves in their vaults or put them on deposit with a correspondent institution to the Federal Reserve banks.