The interest rates and these tools provide a passage in which the money market interest rates can fluctuate. The minimum reserve requirements serve as a tool targeting at regulating the banking system liquidity and stabilizing the money market interest rates. The amount of minimum reserves to be held by each commercial bank is determined in relation to its reserve base applying the required reserve ratio.
The interest rates and these tools provide a passage in which money market interest rates can fluctuate. The minimum reserve requirements serve as a tool aimed at regulating banking system liquidity and stabilizing money market interest rates. The amount of minimum reserves that commercial banks must hold is determined based on their reserve base, using the required reserve ratio.