What kinds of balances do depository institutions hold at Reserve Banks?
Institutions hold required reserve balances, clearing balances, and excess balances. Required reserve balances are balances that an institution holds in an account directly at a Federal Reserve Bank or indirectly through a pass-through correspondent to satisfy its reserve requirement. Clearing balances are balances that an institution agrees to hold, in addition to a required reserve balance, in its account at a Federal Reserve Bank under a clearing balance agreement. Excess balances are balances that an institution holds in its account that exceed the sum of the institution’s required reserve balance and clearing balance.
