The Law Dictionary

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LEGAL RESERVES Definition & Legal Meaning

Definition & Citations:

Lawful, mandated minimum monetary amount a financial institution maintains as security. Cannot be used to pay depositors. Must exist in legally prescribed form, such as cash. Credit in the local economy is regulated by national financial authorities through manipulating the legal reserve requirements. Banks, building societies, credit unions, and insurance companies are such financial institutions legally bound. Also known as statutory reserves.

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