Q.What are bank reserves?

Key numbers

Download the data (CSV): every week from December 2002 to October 21, 2026, with reserves, the Fed's total assets, the reserve share and the interest rate on reserves.

What reserves are, in plain terms

Think of the Fed as the bank for banks. Every bank has an account there, and the balance in that account is its reserves. When you send a wire from Bank A to a friend at Bank B, Bank A's reserve balance goes down and Bank B's goes up. Reserves never leave the banking system to the public: you can't hold them, only banks (and a few other institutions with Fed accounts) can.

Two things count as reserves: these Fed balances and the cash sitting in bank vaults. Before 2008, vault cash did most of the work. In August 2007, banks were required to hold $40.1 billion of reserves and met most of that with vault cash, which is why their Fed balances were only about $5 billion.

Where reserves come from, and where they go

Only the Fed can create or destroy reserves in total. Banks can pass them around, but they cannot make more by lending. The total moves for four reasons:

1. The Fed buys or sells assets. When it buys a Treasury bond, it pays by crediting the seller's bank's reserve account: new reserves. That is quantitative easing. When bonds mature and are not replaced, reserves shrink: quantitative tightening.
2. The Treasury's checking account moves. The government banks at the Fed too. When tax payments pile into the Treasury General Account ($952 billion on Oct 21 2026), reserves fall; when the Treasury spends, they come back.
3. The reverse repo facility. Money funds parked $2.55 trillion there at the end of 2022; as that drained toward zero, reserves held up during QT. Our reverse repo explainer has the full story.
4. Cash. Every $100 bill withdrawn from an ATM is a reserve turned into currency ($2.49 trillion is in circulation now).

Why the Fed keeps so many now

Before 2008 the Fed steered short-term rates by keeping reserves scarce and adjusting them slightly every day. After 2008 that stopped working: QE flooded the system. On January 30, 2019 the Fed made it official, saying it would keep running policy in a regime "in which an ample supply of reserves" lets it control rates through the rates it sets, rather than by managing the quantity of reserves (FOMC statement).

The key tool is the interest it pays on reserves. No bank will lend overnight for much less than it can earn risk-free at the Fed, so IORB acts as a floor under short-term rates. That is why the fed funds rate sits just below it.

How "ample" is ample? September 2019 was the test. Reserves had fallen to $1.39 trillion when, on September 17, 2019, overnight repo rates jumped to 5.25%, and the Fed had to start adding reserves again. In December 2025 it said reserves had "declined to ample levels", ended QT, and began buying Treasury bills to keep them there (about $215 billion through August 2026, per our QT explainer).

Common misconceptions

Related

• The Fed balance sheet over time, explained
• What is the Fed's reverse repo facility?
• What is quantitative tightening?
• What is the fed funds rate, and what is it right now?
• Article: Is the AI market a 2008 setup? The data

FAQ

What are bank reserves?

Bank reserves are the balances banks hold in their own accounts at the Federal Reserve, the money banks use to pay each other. In the week ended October 21, 2026 they totaled $2.963 trillion, per the Fed's H.4.1 release. Cash in bank vaults also counts as reserves, but almost all reserves today are these Fed balances.

What are bank reserves used for?

Mainly to settle payments between banks (every wire and check clearing moves reserves from one bank's Fed account to another), to meet liquidity rules, since reserves count as the safest high-quality liquid asset, and as a safe asset that earns the Fed's interest rate on reserve balances, 3.90% since September 17, 2026.

Do banks still have to hold reserves?

No. The Fed cut reserve requirement ratios to zero percent effective March 26, 2020, eliminating reserve requirements for all depository institutions. Banks hold about $3 trillion anyway because reserves are liquid, safe and pay interest.

Where do bank reserves come from?

The Fed creates them. When it buys Treasuries or mortgage bonds, it pays by crediting the seller's bank's reserve account. Reserves shrink when the Fed lets bonds run off (QT), when the Treasury's account at the Fed grows, when money moves into the Fed's reverse repo facility, or when people withdraw cash.

What are excess reserves?

Reserves above the legal requirement. Before 2008 excess reserves were close to zero because holding them earned nothing. Since reserve requirements went to zero in March 2020, all reserves are technically excess, and the Fed stopped publishing a separate excess reserves series in 2020.

Sources

All checked October 24, 2026.

Primary

• Board of Governors of the Federal Reserve System, H.4.1 Factors Affecting Reserve Balances (release of October 23, 2026, week ended October 21): reserve balances, currency in circulation, Treasury General Account, reverse repos.
• Federal Reserve, Reserve Requirements: ratios cut to zero percent effective March 26, 2020.
• Federal Reserve, Interest on Reserve Balances: legal authority (Financial Services Regulatory Relief Act of 2006, advanced to October 1, 2008 by the Emergency Economic Stabilization Act of 2008) and the IORB rate.
• FOMC, Statement Regarding Monetary Policy Implementation and Balance Sheet Normalization (January 30, 2019): the ample-reserves regime.
• Federal Reserve, implementation note of December 10, 2025: reserves "declined to ample levels", reserve management purchases.

Data (Federal Reserve via FRED, St. Louis Fed)

• WRESBAL reserve balances, WALCL total assets, TOTRESNS total reserves, REQRESNS required reserves, IOER and IORB rates, RESPPLLOPNWW earnings remittances (deferred asset).

Our data

• data.csv: weekly reserves and total assets (H.4.1 via FRED), the reserve share and the interest rate on reserves in force each week. The share and the $115.6 billion yearly interest figure ($2.963T x 3.90%, assuming today's size and rate hold for a year) are our math.

Images

• Three charts rendered by Tensorust with the Proof Engine from Federal Reserve data. H.4.1 screenshot: federalreserve.gov, captured October 24, 2026.