Required Reserves:

50% of Demand Deposits

50% of Time Deposits

Into the table showing the effects of your real estate loan I have inserted a section showing information about bank reserve requirements. In this first example I have set the reserve requirements at 50% for both demand and time deposits.

I will explain the figures related to Your Bank. You can figure out how that works with Other Bank.

Reserve Requirements & Credit Potential For Your Bank

Total Deposits (Actual Deposits: Demand & Time)

Your Bank has $7,487,070 in total deposits. ($6,029,656 demand deposits and $1,457,414 time deposits.)

 

Demand Reserve Ratio: 50.00%
Time Reserve Ratio: 50.00%

 

Actual Reserves

Your Bank has Actual Reserves of $7,287,070 (careful that's $200,000 less than total deposits. It just worked out that way.)

Required Reserves

Based on reserve requirements of 50% for demand and 50% for time Your Bank is required to keep $3,743,535 in reserves.

Excess Reserves

With Actual Reserves of $7,287,070 less Required Reserves of $3,743,535, Your Bank has $3,543,535 in Excess Reserves.

Effective Reserve Ratio

By dividing the Required Reserves of $3,743,535 by the Actual Reserves of $7,287,070 we see that Your Bank has an Effective Reserve Ratio of 50%. (I will use the Effective Reserve Ratio to calculate an approximation of Your Bank's credit potential.)

Deposit Maximum

By dividing Actual Reserves of $7,287,070 by the Effective Reserve Ratio of 50% I can estimate that Your Bank can have maximum total deposits of $14,574,140.

Credit Potential

If Your Bank currently has $7,487,070 in total deposits and it could have total deposits of $14,574,140, it could add another $7,087,070 in deposits within the limits of its reserve requirements.

 

You can see that Other Bank, with a much larger deposit base has a greater credit potential.