Reserve Ratio Calculator
Enter any two of the four core banking values (total deposits, reserves held, reserve ratio, or loanable funds) and the calculator solves for the remaining two. It also shows your required reserves, excess reserves, and the money multiplier that links the reserve ratio to potential money creation. The "show your work" panel walks through every step with your actual numbers.
What is the reserve ratio?
The reserve ratio (also called the cash reserve ratio or reserve requirement) is the fraction of customer deposits that a bank must hold in liquid form rather than lending out. It is expressed as a percentage: a 10% ratio means that for every $100 deposited, the bank keeps $10 in reserve and can lend the remaining $90. These reserves are held either as vault cash or as deposits at the central bank. The ratio has two purposes: it ensures that banks can meet ordinary withdrawal demand (the liquidity purpose), and it gives central banks a lever for controlling the overall money supply (the monetary policy purpose).
How to use this calculator
Use the "Solve for" dropdown to choose which variable you want to find. If you know a bank's total deposits and the reserves it holds, select "Reserve ratio" to compute it directly. If you know the deposits and the target ratio, select "Reserves" to find how much must be held back. Select "Total deposits" to reverse-solve from reserves and ratio, or select "Loanable funds" to quickly see how much is available for lending. The required reserve ratio field is separate - enter the central bank's mandated minimum (or 0 for countries with no requirement) to see required reserves, excess reserves, and the theoretical money multiplier at that legal minimum.
The money multiplier and deposit expansion
The money multiplier is the reciprocal of the reserve ratio: multiplier = 1 / reserve ratio. It represents the maximum amount of new deposit money the banking system can create from each dollar of base money injected by the central bank. At a 10% reserve ratio the multiplier is 10, meaning $1 of new reserves could support up to $10 in total system-wide deposits through successive rounds of lending and re-depositing. In practice the actual multiplier is lower because households hold some cash outside the banking system, banks hold excess reserves as a buffer, and loan demand is not unlimited. The money multiplier chart on this page shows how the multiplier falls steeply as the reserve ratio rises, which is why central banks use small changes in reserve requirements for large monetary effects.
Required vs excess reserves
Required reserves are the minimum the central bank mandates: required reserves = deposits x required reserve ratio. Excess reserves are whatever a bank holds above that floor: excess reserves = actual reserves - required reserves. Before 2008 banks in the United States held almost no excess reserves because they earned no return on them. After the financial crisis the Federal Reserve began paying interest on excess reserves (IOER, now IORB), giving banks an incentive to park money at the Fed rather than lend it. By March 2020 the Fed eliminated its formal reserve requirement entirely, shifting the system to a floor model where abundant excess reserves and the IORB rate anchor short-term interest rates. Many other central banks have made similar moves. Knowing whether a bank's reserves are required or voluntary tells you something about its liquidity strategy and appetite for risk.
Historical and international reserve requirements
| Country / Region | Era / Year | Reserve Ratio | Notes |
|---|---|---|---|
| United States | 1992-2020 | 10% | Standard requirement, eliminated March 2020 |
| United States | 2020 - present | 0% | Fed reduced to zero; banks self-regulate |
| China | 2024 | 7-10% | PBOC sets differentiated ratios by bank tier |
| Eurozone | 2024 | 1% | ECB minimum reserve requirement |
| United Kingdom | Pre-2009 | 0.15% | Very low historical requirement |
| India | 2024 | 4% | RBI Cash Reserve Ratio (CRR) |
| Canada | Pre-1992 | 12% | Eliminated statutory reserve requirements in 1992 |
| Australia | 2024 | 0% | No mandatory reserve ratio; uses liquidity coverage |
| Brazil | 2024 | 21% | Banco do Brasil - demand deposits |
Selected reserve requirement levels by country and period. Requirements can change; verify with the central bank for current figures.
Frequently asked questions
What is the formula for the reserve ratio?
Reserve ratio = Reserves / Total deposits. For example, if a bank holds $150,000 in reserves and has $1,000,000 in deposits, the reserve ratio is 150,000 / 1,000,000 = 0.15, or 15%. The loanable funds formula is simply: Loanable funds = Deposits - Reserves, which equals Deposits x (1 - Reserve ratio).
Does the US still have a reserve requirement?
No. The Federal Reserve reduced the reserve requirement to 0% in March 2020 as an emergency measure during the COVID-19 pandemic and has not reinstated it. US banks now operate under a "floor system" where the Fed sets short-term interest rates by paying interest on reserve balances (IORB) held at the Fed. Banks voluntarily hold large excess reserves for liquidity and to earn the IORB rate. Many other countries including Canada, the UK, Australia, and New Zealand have also eliminated formal reserve requirements.
What is the money multiplier and why does it matter?
The money multiplier (1 / reserve ratio) is the theoretical maximum number of dollars the banking system can create from a single dollar of central bank base money. At a 10% reserve ratio the multiplier is 10, meaning each $1 of new reserves can support up to $10 in total system-wide deposits through the deposit-expansion process. It matters because it shows how fractional-reserve banking amplifies monetary policy actions. A central bank that injects $1 billion in new reserves could theoretically enable $10 billion in new deposits and lending at a 10% ratio.
What is the difference between required and excess reserves?
Required reserves are the minimum a bank must hold to comply with the central bank's mandate: required reserves = deposits x required reserve ratio. Excess reserves are any additional reserves held above that legal floor. Before 2008, US banks held almost zero excess reserves. After the Fed started paying interest on excess reserve balances, banks began holding trillions in excess reserves. In a system with no reserve requirement, all reserves are technically "excess" but banks maintain them for liquidity management and to earn the central bank's policy rate.
How does the reserve ratio affect the money supply?
A higher reserve ratio means banks must keep more deposits on hand and can lend less, which shrinks the money multiplier and reduces the amount of credit money the system creates. A lower ratio lets banks lend more of each deposit, increasing the multiplier and expanding the money supply. Central banks historically used changes in the reserve requirement as a blunt monetary policy tool, though most modern central banks now prefer open market operations and interest rate policy as more precise instruments.
Can a bank have a reserve ratio above 100%?
Yes, though it is extremely unusual and economically inefficient. A ratio above 100% means the bank holds more in reserves than its total deposits, which could occur if it received a large capital injection or central bank loan that it has not yet deployed. In normal banking, reserve ratios range from near 0% to around 30-40% depending on the country and regulatory environment.