Enter the total reserve maintained with the central bank and the total deposit liabilities into the calculator to determine the reserve ratio.
Reserve Ratio Formula
The following equation is used to calculate a reserve ratio.
RR = RMCB / DL
- Where RR is the reserve ratio
- RMCB is the reserve maintained by the central bank
- DL is the deposit liabilities
Reserve Ratio Definition
A reserve ratio is defined as the ratio of total cash to total liabilities held by a central bank.
Reserve Ratio Example
How to calculate reserve ratio?
- First, determine the total reserve.
Calculate the total cash reserve.
- Next, determine the total liabilities.
Calculate the total liabilities of the country.
- Finally, calculate the reserve ratio.
Calculate the reserve ratio using the formula above.
A reserve ratio is a financial term used to describe the ratio of cash held as a reserve to the total liabilities of the central bank of any given country.
What is considered acceptable as a reserve ratio will depend on the global standing of the country and the trust in that country to pay its debts. The greater the trust with the global economy the lower the ratio needs to be.