what does a higher reserve requirement mean 
a higher reserve requirement means the federal reserve is pursuing a contractionary monetary policy if banks have a higher reserve requirement there will be less money available to lend to consumers and businesses however this money will then provide the banks with a level of protection against possible bank failure should there be an economic downturn or a run on the bank bottom linereserve requirements specify the amount of cash a bank must have close at hand in order to cover sudden withdrawals and protect the system from bank runs by depositors the bank can hold the reserves in a vault or at the closest fed bank 