Ample Reserves, Hollow Buffers: Reserve Distribution and Policy Incidence in U.S. Banking

Abstract

Since 2008, U.S. bank reserves have been large in aggregate, but aggregate abundance does not show whether individual banks hold large reserve-eligible balances relative to their historical policy base. Using Call Report microdata (2001-2024), I calculate bank-level reserve ratios for banks with a material retail deposit franchise. In 2024:Q4, 39.2% of retail-franchise banks, holding 10.4% of sample deposits, fall below the historic 10% benchmark. The lower tail emerged after reserve requirements went to zero and is concentrated among mid-sized, transaction-account-intensive banks, not weakly capitalized ones. Aggregate reserves cannot answer bank-level incidence questions central to operating-regime and remuneration debates.

Citation

Pusateri, Nicholas R. 2026. “Ample Reserves, Hollow Buffers: Reserve Distribution and Policy Incidence in U.S. Banking.” Working Paper. URL: https://nicpusateri.com/hollow

@article{pusateri2026hollow,
  title={Ample Reserves, Hollow Buffers: Reserve Distribution and Policy Incidence in U.S. Banking},
  author={Pusateri, Nicholas R.},
  journal={Working Paper},
  year={2026},
  url={https://nicpusateri.com/hollow},
  }