[This is part of the series: The Complete Guide To Economics 101.]
What are bank excess reserves?
Bank Excess Reserves are deposits that a bank holds in reserve that are in excess of the bank’s reserve requirement.
Take, or instance, a bank with $100 million in deposits.
And reserve requirements of $10 million.
This bank’s excess reserves would be all deposit reserves kept by the bank over $10 million.
So if total reserves are $12 million, in this case, excess reserves are $2 million.