Enter the total legal reserves and the total required reserves into the calculator to determine the excess reserves.

Excess Reserves Calculator

Enter any 2 values to calculate the missing variable

Excess Reserves Formula

The following formula can be used to calculate the excess reserves of a bank. 

ER = LR - RR
  • Where ER is the excess reserves ($)
  • LR is the legal reserves ($)
  • RR is the required reserves ($)

To calculate the excess reserves, subtract the required reserves from the legal reserves.

Excess Reserves Definition

An excess reserve is defined as the difference between the legal reserve amount and the required reserve amount.

Excess Reserves Example

How to calculate excess reserves?

  1. First, determine the total amount of reserves.

    Measure or calculate the total amount of reserves currently held by the bank. For this example, we will say the bank has $1,000,000.00 in reserves.

  2. Next, determine the required reserves.

    Based on the laws of the country, determine the required amount of reserves that need to be held. We will assume this is $500,000.00.

  3. Finally, calculate the excess reserves.

    Using the formula, we find the excess reserves to be, $1,000,000.00 – $500,000.00 = $500,000.00.

FAQ

What are excess reserves?

Excess reserves are reserves held by a depository institution (such as a commercial bank) above the amount required to be held as required reserves.

What are reserves?

Reserves are highly liquid assets held by depository institutions, typically vault cash and deposits held at a central bank, used to meet withdrawals/settlements and any applicable reserve requirements.