Reserve refers to the reserve set to reduce costs and process risks. The purpose of the savings fund is to deal with future buybacks, redeem debts or prevent losses. The deposit reserve ratio refers to the ratio of the amount of deposit reserve set by the central bank to all deposits. By adjusting the deposit reserve ratio, the central bank can achieve the purpose of affecting the credit expansion ability and money supply.

Introduction to deposit reserve

The ratio of deposit reserve to total deposits of financial institutions is the deposit reserve ratio. Under the relevant system of deposit reserve, financial institutions cannot use all their deposits for loan business, and must reserve certain funds as deposit reserve to ensure that they can provide temporary withdrawal services to customers normally. At the same time, the establishment of deposit reserve is beneficial for financial institutions to maintain their normal operating order.