The RequiredReserveisdepositors'bank's minimum balanceofdepositsincentralbanktoensure that the bank do no run out of cash on hand to meet the demandfor withdrawalsandsettlement.
The central question in putting global finance to rights is how to strike the balance between, on the one hand, coping with financial distress once it has started and, on the other, improving incentives so that lenders and borrowers do not get into trouble in the first place.