Funds deposited by commercial banks at Federal Reserve Banks. By requiring banks to set aside some funds (preventing that portion from being lent out), the Federal Reserve ensures that US banks have some cushion should depositors demand unusually high withdrawals.

Fed Funds reserve requirements reflect one strategy the Federal Reserve uses to maintain the stability of the banking industry and money supply.

A central bank may also adjust reserve requirements to cool or help spur economic growth. By increasing this requirement, banks have less to lend out, reducing county-wide investment, reducing growth.