Relate central banks with commercial banks, Macroeconomics

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Relate central banks with commercial banks

In many countries, the central bank imposes reserve requirements. This means that commercial banks are obliged to hold a certain percentage of deposits as reserves either as currency in their vaults or as a deposit at the central bank. Reserve requirements are usually rather small (typically between 0% and 10%) which means that the monetary base is quite close to the value of all currency outside the central bank.

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