In the US, the Federal Reserve Board sets reserve requirements. These help to ensure that banks have sufficient cash on hand for depositors, and serves as a tool for monetary policy.

Increasing the reserve requirements forces banks to hold a higher percentage of funds as deposits, recusing them from lending those deposits out. This reflects an increase in the cash on hand banks hoold, and reflects a decrease in the amount they are able to lend to borrowers, which will decrease the money supply.

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For more information on the above term, try: Monetary Policy Money And Interest Rates - By Country