A type of reserve and one of the three categories of money issued or maintained by a central bank (a reserve bank). Such reserves are created by a central bank (reserve bank) in order to facilitate payments between financial institutions within its jurisdiction. Another important component of central bank reserves is gold that represent a safe holding, in addition to its liquidity and return characteristics. Central banks have significant holdings of gold as a type of reserve, roughly accounting for a fifth of all the gold that has been mined throughout history (2023 figures).
Central banks also hold excess reserves deposited by commercial banks and other financial institutions as part of their liquidity management, for such excess or extra reserves a central bank pays interest in the form of a policy rate.
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