Reserves

“money for banks” in accounts at the central bank — banks pay each other with it

In more detail

Banks' money in accounts at the central bank — what banks pay each other with. This is a separate kind of money: people and companies cannot hold it.

It is needed because there are many banks, and a payment between customers of different banks has to be closed with something. Banks are not satisfied with each other's entries — they need a shared asset that belongs to nobody.

Covered in the primer of chapter 1.

Where it appears in the course

In the academy “Reserves” is not a definition but an operation: you post it yourself and watch what it does to the balance sheet.

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