The reserve requirement affects interest rates by impacting the money multiplier and monetary base. With more money in the system, interest rates will be lower, with a higher reserve interest rates will be higher. Also if a bank has to keep for example 50% reserves then they can only lend out and collect interest on 50% of their money which means that the rate charged to borrowers will have to be significantly higher.
Copyright © 2026 eLLeNow.com All Rights Reserved.