free reserves
[friː rɪˈzɜːrvz]
noun
reservas livres
1. The portion of a bank's reserves that exceeds the minimum reserve requirement set by the central bank, available for lending or investment purposes
The bank's free reserves increased after the central bank lowered the reserve requirement ratio.
As reservas livres do banco aumentaram após o banco central reduzir o índice de compulsório.
2. Assets held by a financial institution that are not legally required to be held as reserves and can be used for operational or investment purposes
Free reserves provide banks with flexibility to meet unexpected withdrawals or fund new loans.
As reservas livres proporcionam aos bancos flexibilidade para atender saques inesperados ou financiar novos empréstimos.
This is a technical financial term primarily used in banking, central banking, and monetary policy discussions. In Brazil, the Central Bank (Banco Central do Brasil) uses this concept in monetary policy implementation. In the USA, the Federal Reserve (Fed) monitors free reserves as an important indicator of monetary conditions and banking system liquidity. The term became particularly significant after the 2008 financial crisis when central banks implemented quantitative easing and modified reserve requirements.
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