Talk:Reserve requirement/Archives/2014
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Primary Liquidity Ratio?
What's the difference between this Reserve Requirement and the Primary Liquidity Ratio, which has been defined as "The primary liquidity ratio is the ratio of cash to total deposits which banks are obliged to maintain"? If they are the same thing, this article needs to state that clearly. 86.45.50.50 (talk) 23:42, 13 March 2011 (UTC)
- It appears the Primary Liquidity ratio is the ration of cash to deposits that banks do maintain, which may or may not be greater than the reserve requirement, the amount they are required to maintain.--Mattmatt1987 (talk) 03:05, 14 March 2011 (UTC)
Reserve Requirement can only be met with central bank reserves and physical cash. Liquidity ratio includes "highly liquid assets", typically government bonds. Epovo (talk) 14:13, 11 June 2014 (UTC)
Mention to capital requirements to be removed
The section on "Countries without reserve requirements" has this text: "This does not mean that banks can - even in theory - create money without limit. On the contrary: banks are constrained by capital requirements, which are arguably more important than reserve requirements even in countries that have reserve requirements." This seems a personal consideration and has little do to with the topic. While it is true that capital requirements are very important, they are not a limit to the money that the banking sector can create over time. Because they are not limited to central bank reserves or cash, re-invested profits will increase the capital and therefore allow banks to lend more, thereby increasing the money supply with no theoretical limit. Epovo (talk) 13:54, 11 June 2014 (UTC)