what are excess reserves 
excess reserves are capital reserves held by a bank or financial institution above amounts required by regulators creditors or internal controls for commercial banks excess reserves are measured against standard reserve requirement ratios set by central banking authorities these required reserve ratios set the minimum liquid deposits such as cash that must be in reserve at a bank more is considered excess excess reserves may also be known as secondary reserves these funds are different from free reserve money free reserves are excess funds held less money from the fed s discount window borrowing 