Reservation is a preparation set in the project plan to reduce the cost and schedule risk. Reserve is a fund set up to cope with future repurchase, redemption of capital debts or prevention of unexpected losses, including loan and securities loss reserve and sinking fund.
The reserve and reserve ratio of commercial banks controlled by the central bank affect the credit scale of banks. This system stipulates that commercial banks cannot lend all the deposits they absorb, but must deposit them in the central bank or in cash according to a certain proportion. The ratio of reserves to total deposits is called reserve ratio.
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The deposit reserve policy is one of the three traditional monetary policy tools. Generally speaking, when the economy is overheated, the tendency of financial institutions to lend increases, and the loan risk caused by the inability to repay funds in the future also rises, the central bank will raise the reserve interest rate and even raise the reserve ratio to cool the economy.
On the contrary, the central bank will consider lowering the reserve interest rate or even the reserve ratio to stimulate banks' lending behavior. At present, the statutory reserve ratio of China's central bank is 6%, but in addition, commercial banks still have an excess reserve of 4-6%, which means that 10% to 12% of the deposits absorbed by commercial banks are deposited in the reserve account of the central bank for interest bearing, and are not used to provide loans to enterprises.
Baidu Encyclopedia-/Reserve