Cash reserves refer to the amount of money that a bank holds in physical currency or deposits with the central bank, which is not lent out or invested.
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Excess Reserves: Excess reserves are the additional funds held by banks beyond their required reserves. These funds can be used for lending or investment purposes.
Fractional Reserve Banking: Fractional reserve banking is a system where banks are required to hold only a fraction of their deposits as reserves and can lend out the rest.
Reserve Requirement: The reserve requirement is the percentage of deposits that banks must hold as reserves, determined by the central bank. It influences the amount of money that can be created through lending.