RESERVE REQUIREMENTS – NECESSARY OR UNNECESSARY INSTRUMENT OF MONETARY REGULATION

Abstract

This paper focuses on examining the role of reserve requirements as an instrument of monetary policy. The required reserve rate is the instrument used by over 90 % of central banks in the world, and thus is a justified need to identify the reasons that went in favor of this instrument, or should, in turn, indicate the reasons why this instrument is considered outdated in modern financial markets. In considering the various theoretical positions and empirical data, it was concluded that the rate of required reserves represents a rigid monetary policy instrument, which in many developed countries abolished or with a low rate, while in the transitional financial sistems are still among the most frequently used instruments of monetary regulation, with relatively high rates.