The tool of monetary policy, according to which every commercial bank is required to keep a certain portion of its deposits with the central bank to avoid liquidity risk. The higher reserve rates, the more decreases in the money supply in the economy and vice versa.
Vincent Nyagaka is a Professional Trader, Analyst &. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Checkout Vincent’s Professional Trading Course here.