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Finance and Economics Discussion SeriesDivisions of Research & Statistics and Monetary AﬀairsFederal Reserve Board, Washington, D.C.Reserve Requirement Systems in OECD CountriesYueh-Yun C. OBrien

2007-54

NOTE: Staﬀ working papers in the Finance and Economics Discussion Series (FEDS) are preliminarymaterials circulated to stimulate discussion and critical comment. The analysis and conclusions set forthare those of the authors and do not indicate concurrence by other members of the research staﬀ or theBoard of Governors. References in publications to the Finance and Economics Discussion Series (other thanacknowledgement) should be cleared with the author(s) to protect the tentative character of these papers.

Reserve Requirement Systems in OECD Countries

Yueh-Yun C. O’BrienJuly 23, 2007Division of Monetary AffairsBoard of Governors of the Federal Reserve SystemWashington, D.C. 20551 U.S.A.(E-mail: m1yco00@frb.gov)I am grateful to Brian Madigan, Board of Governors of the Federal Reserve System, for hiscareful review and valuable comments on this and earlier drafts. I also thank Faruk Kavak, theCentral Bank of the Republic of Turkey, for his helpful comments on required reserve system inTurkey. The author is responsible for any errors in the paper. The analysis and conclusions setforth are those of the author and do not indicate concurrence by other members of the researchstaff or the Board of Governors of the Federal Reserve System.

Reserve Requirement Systems in OECD Countries

Yueh-Yun C. O’Brien

Abstract

This paper compares the reserve requirements of OECD countries. Reserve requirementsare the minimum percentages or amounts of liabilities that depository institutions are required tokeep in cash or as deposits with their central banks. To facilitate monetary policyimplementation, twenty-four of the thirty OECD countries impose reserve requirements toinfluence their banking systems’ demand for liquidity. These include twelve OECD countriesthat are also members of the European Economic and Monetary Union (EMU) and twelve non-EMU OECD countries. All EMU countries employ a single reserve requirement system, whichis treated as one entity.The reserve requirement system for each of the twelve non-EMU OECD countries isdiscussed separately. The similarities and differences among the thirteen reserve requirementsystems are highlighted. The features of reserve requirements covered include: reservableliabilities, required reserve ratios, reserve computation periods, reserve maintenance periods,types of reserve requirements, calculations of required reserves, eligible assets for satisfyingreserve requirements, remuneration on reserve balances, non-compliance penalties, carry-over of reserve balances, and required clearing balances.Key words: reservable liabilities, required reserve ratios, reserve computation periods, reservemaintenance periods, lagged reserve requirements, remuneration.JEL classifications: E4, E5

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