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

- Reserve Ratio Calculator
- Sinking Fund Calculator
- Cash Flow From Assets Calculator
- Money Supply Calculator

## 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?

**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 reserve.

**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.

**Finally, calculate the excess reserves.**Using the formula, we find the excess reserves to be, $1,000,000 – $500,00 = $500,000.

## FAQ

**What are excess reserves?**

Excess reserves are the amount of extra currency/money a central regulatory bank has over the reserve amount required by law.

**What are reserves?**

Central banks and regulatory authorities are often required to keep a certain amount of money on hand as reserves in case of emergency.