ECON201 SEU Cash Reserve Ratio Discussion


Topic: The reserve ratio is the portion of reservable liabilities that commercial banks must hold onto, rather than lend out or invest. This rate is determined by the Country’s Central Bank. The Cash Reserve Ratio of select Middle Eastern Countries are given below:

Bahrain (%) — 5.0

Oman (%) — 5.0

Saudi Arabia (%) — 7.0

United Arab Emirates (%) — 1.0

As can be seen, the cash reserve ratio of Saudi Arabia is highest among the listed nations. “Discuss on the implications of the 7% reserve rate on Saudi economy, highlighting the advantages and disadvantages”.