Published On: Mon, Apr 8th, 2013

Reserve portfolio

A reserve portfolio is essentially the savings account fund of a central bank.

Monetary policy directs the central bank to set aside funds for the required reserve amount.  The central bank must show and provide for adequate funds to support the central bank, its clients and its business structure.  Many factors affect the reserve balance of the portfolio, including repurchase agreements, credit held, loans in primary, secondary and seasonal credit, gold stock and Treasury cash.  Investors find that the Federal Reserve’s portfolio reserve amount can influence some markets, such as the secondary mortgage market under special channels such as an excess reserves channel and a balancing portfolio channel.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.