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.