mandatory reserves
[MAN-də-tor-ee rih-ZURVZ]
nounpl: mandatory reserves
reservas obrigatórias
1. The minimum amount of funds that financial institutions are required by law to hold and not lend out, set by central banking authorities to ensure financial stability
The Federal Reserve increased mandatory reserves to control inflation in the economy.
O Banco Central aumentou as reservas obrigatórias para controlar a inflação na economia.
2. Capital or liquid assets that banks must maintain as a percentage of their deposits according to regulatory requirements
Banks must maintain mandatory reserves equal to a certain percentage of customer deposits.
Os bancos devem manter reservas obrigatórias equivalentes a um percentual dos depósitos dos clientes.
Mandatory reserves are a crucial tool in Brazilian and U.S. monetary policy. The Banco Central do Brasil (Central Bank of Brazil) frequently adjusts mandatory reserve requirements to influence lending and control inflation. In the USA, the Federal Reserve uses reserve requirements as part of its monetary policy toolkit, though their use has become less common since the 2008 financial crisis.
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