UK banks reserve ratio.

[infundibulum]

Can anyone please tell me if UK banks must hold a proportion of depositors money in reserve when issuing loans based on said money?

[factor-fiction]

This may be of interest
http://moneyterms.co.uk/reserve-requirement/
and this
http://en.wikipedia.o...ional_reserve_banking

[factor-fiction]

The BoE abolished its minimum reserve ratio in 1981. It now agrees a reserve requirement individually with each bank. This reflects both the level of competition the bank is experiencing from its foreign rivals, and the lending and other risks that it is perceived to be running.

[twix123]

The Financial Services Authority now sets the liquidity requirements for UK banks:

http://www.fsa.gov.uk...ion/pr/2012/072.shtml

It is unfortunate that the Government appointed FSA has insisted that the banks increase their reserves and at the same time ensure that the lending was affordable to the borrowers and secured, meanwhile Parliament has been castigating the banks for not increasing their lending. Hopefully the new lower liquidity requirements will allow the banks to increase their lending.

[infundibulum]

Thanks for that information factor30 and twix123 ........ as I should have originally posted 'what proportion of depositors money' rather than 'a proportion of depositors money ' , I am none the wiser , as your kind links are nebulous in that area .
Ta anyway.

[twix123]

If you are really interested in reading the technical details, go to the FSA Website and look at their Handbook. The relevant section is Prudential Standards - BIPRU:

http://fsahandbook.in...A/html/handbook/BIPRU

although I think that this is too specialised to really answer your question, but are the rules that Banks and Building Societies have to adhere to.

[infundibulum]

Thanks again twix123.

I felt like your current avatar after 30 seconds browsing BIPRU {;-0