Reservas bancarias

What Are Reservas Bancarias?

Reservas bancarias, or bank reserves, are the cash holdings that commercial banks maintain either in their vaults (vault cash) or on deposit at a central bank. These reserves represent a crucial component of the financial system and play a pivotal role in the implementation of monetary policy. By holding reservas bancarias, banks ensure they have sufficient liquidity to meet daily customer demands for withdrawals and to settle transactions with other banks. The amount of reservas bancarias held by a bank can fluctuate based on customer deposits and withdrawals, as well as the actions of the central bank.

History and Origin

The concept of banks holding reserves has roots in the early days of commercial banking, where institutions needed to maintain a portion of their deposits as readily available cash to cover withdrawals. In the United States, efforts to promote bank liquidity through reserve requirements can be traced back to the Panic of 1837. Early state laws began to mandate that banks hold a minimum ratio of liquid assets relative to their liabilities. For instance, in 1842, Louisiana enacted a law requiring banks to maintain a reserve in specie equal to one-third of their total public liabilities, encompassing both notes and deposits.¹⁶

Despite these early requirements, banking panics and suspensions of deposit convertibility continued to occur.¹⁵ This eventually led policymakers to conclude that a more centralized approach was necessary to ensure financial stability. The establishment of the Federal Reserve System in 1913, following the Panic of 1907, marked a significant shift, as it aimed to provide central control of the monetary system to alleviate financial crises and subject all member banks to reserve requirements set by the Fed.¹⁴ Over time, the purpose of reserve requirements evolved from primarily ensuring individual bank liquidity to becoming a key tool for the central bank to influence the cost of credit and overall money supply in the economy.¹³ The Federal Reserve's Board of Governors officially reduced reserve requirement ratios to zero percent, effective March 26, 2020, effectively eliminating these requirements for all depository institutions.¹²

Key Takeaways

• Reservas bancarias are the funds commercial banks hold as vault cash or deposits at the central bank.
• They provide banks with the necessary liquidity to meet customer withdrawals and interbank transactions.
• Central banks historically used reserve requirements as a tool to manage the money supply and influence interest rates.
• While regulatory reserve requirements have been reduced to zero in some major economies like the U.S., banks continue to hold reserves for operational and precautionary reasons.
• The level of reservas bancarias impacts a bank's ability to engage in lending and affects the overall flow of credit in an economy.

Interpreting Reservas Bancarias

The level of reservas bancarias held by commercial banks offers insights into the prevailing liquidity conditions within the banking sector and the broader economic growth outlook. When banks hold significant excess reserves (reserves beyond any required minimum), it can indicate a cautious lending environment, or it could reflect ample liquidity supplied by the central bank through its operations. Conversely, low reserve levels might suggest tighter lending conditions or a robust demand for credit.

Central banks, even in a zero-reserve requirement environment, influence the level of reservas bancarias through various tools, such as open market operations and the interest paid on reserves. Analyzing these reserve levels helps economists and policymakers gauge the effectiveness of monetary policy and assess potential inflationary or deflationary pressures.

Hypothetical Example

Consider "Banco Futuro," a hypothetical commercial bank. At the start of a business day, Banco Futuro has $500 million in customer deposits. For operational purposes and to ensure it can cover daily withdrawals and clear checks, the bank decides to hold $50 million as reservas bancarias with its central bank, and an additional $10 million as physical cash in its vaults.

Throughout the day, customers withdraw $20 million from their accounts, reducing Banco Futuro's total deposits to $480 million. To compensate for these withdrawals and maintain its desired liquidity, Banco Futuro might choose to draw down some of its reserves held at the central bank. If, later in the day, other banks deposit $15 million into Banco Futuro's accounts, its deposits increase, and it might choose to increase its holdings of reservas bancarias again, demonstrating how these reserves are constantly adjusted to manage daily banking operations and maintain a healthy balance sheet.

Practical Applications

Reservas bancarias are fundamental to the operation of modern banking and are central to how central banks implement their objectives.

1. Liquidity Management: For individual commercial banks, holding reservas bancarias is essential for managing day-to-day liquidity needs. They serve as a buffer against unexpected deposit withdrawals and enable banks to make payments to other institutions.
2. Monetary Policy Tool: Historically, and in many jurisdictions still, central banks mandated minimum reserve requirements (see Encaje bancario below). By adjusting these requirements, central banks could influence the amount of funds available for lending in the economy, thereby affecting the money supply and interest rates. Even where requirements are zero, central banks influence reserves through open market operations and the interest paid on reserves.
3. Financial Stability: Adequate reservas bancarias contribute to overall financial stability by reducing the risk of bank runs and ensuring the smooth functioning of the payments system. The International Monetary Fund (IMF) emphasizes prudent reserve management by central banks to underpin financial resilience.¹¹ A Reuters explainer article highlights how bank reserves function to help banks meet their payment obligations and manage their liquidity needs.¹⁰

Limitations and Criticisms

While essential for banking operations, the traditional role of mandated reservas bancarias as a primary monetary policy tool has faced limitations and criticisms, leading some central banks, notably the U.S. Federal Reserve, to reduce reserve requirements to zero.

One significant limitation is that setting high reserve requirements can restrict a bank's ability to lend, potentially hindering economic growth. Conversely, very low or zero requirements can, in theory, allow banks to expand credit significantly. Critics also argue that strict reserve requirements can be an inefficient way to control the money supply in a modern financial system where money is created through lending, not just by changes in base money. Furthermore, a bank's decision to hold reserves is often driven by operational needs and market conditions rather than solely by a regulatory minimum, especially with the availability of other central bank facilities like the discount window.

The Federal Reserve's decision to eliminate reserve requirements in 2020 acknowledged that these requirements no longer played a significant role in controlling the quantity of money or credit, as the central bank effectively manages the federal funds rate and broader liquidity conditions through other tools.⁹

Reservas bancarias vs. Encaje bancario

While closely related, "Reservas bancarias" (bank reserves) and "Encaje bancario" (reserve requirement) refer to distinct concepts:

Confusion often arises because, historically, the primary reason for banks to hold a significant portion of their reservas bancarias was to satisfy the encaje bancario. However, with the shift in monetary policy frameworks, particularly in the U.S., where the reserve requirement is now zero, banks continue to hold reserves for operational needs, but not due to a mandatory ratio.

FAQs

Q: Why do banks hold reservas bancarias if there's no reserve requirement?

A: Even without a mandatory encaje bancario, banks hold reservas bancarias for several practical reasons. They need sufficient liquidity to process customer withdrawals, make payments to other banks, and settle transactions. These reserves also serve as a buffer for unexpected outflows and are often used to manage their overall balance sheet and meet internal risk management policies.

Q: How do central banks influence reservas bancarias now that reserve requirements are low or zero?

A: Central banks primarily influence reservas bancarias through open market operations, where they buy or sell government securities to inject or withdraw funds from the banking system. They also pay interest on reserves held by banks, which incentivizes banks to hold more or fewer reserves. These tools allow central banks to manage the overall level of liquidity in the financial system and guide short-term interest rates.

Q: What is the difference between vault cash and reserves at the central bank?

A: Both vault cash and deposits at the central bank constitute a bank's total reservas bancarias. Vault cash refers to the physical currency held by a bank in its branches and ATMs. Deposits at the central bank are electronic balances held by the commercial bank in an account with the central bank. Both forms are immediately available for use by the bank.

Q: Do high reservas bancarias always mean more lending?

A: Not necessarily. While high reservas bancarias mean banks have ample funds, increased lending also depends on various factors, including loan demand from creditworthy borrowers, the bank's risk appetite, and the overall economic outlook. Banks might choose to hold excess reserves if lending opportunities are scarce or if they perceive higher risks in the market.^12345678