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Reserve Ratio Calculator

Formula

The formula to calculate the Reserve Ratio (RR) is:

$RR = \frac{RMCB}{DL}$

Where:

$RMCB$ is the reserve maintained by the central bank ($).
$DL$ is the deposit liabilities ($).

Example

Let's say the reserve maintained by the central bank ( $RMCB$ ) is $100,000 and the deposit liabilities ( $DL$ ) are $1,000,000. Using the formula:

$RR = \frac{100,000}{1,000,000}$

We get:

$RR = 0.10$

So, the Reserve Ratio ( $RR$ ) is 0.10 or 10%.

What is a Reserve Ratio?

A reserve ratio is defined as the ratio of total cash to total liabilities held by a central bank. It is a measure used to ensure that banks maintain a certain level of reserves to meet their deposit liabilities.