Q:

How do you calculate reserve ratio?

A:

Quick Answer

The reserve ratio is calculated by finding the ratio between the amount of funds held by a financial institution and the total amount of liabilities carried by the institution, according to the Board of Governors of the Federal Reserve System. The ratio can be found by dividing the numbers.

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How do you calculate reserve ratio?
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Full Answer

In the United States, the Federal Reserve Board sets a minimum reserve ratio threshold that banks must meet, as explained by the Board of Governors of the Federal Reserve System. In banking, a liability is the amount of money the bank owes to other parties, according to Investopedia. As the Federal Reserve explains, the reserve ratio for U.S. banks is based on a 14-day period.

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