Bank Reserve Requirements in the Eurozone

Following the crisis in Cyprus of which I talked about here, there has been a question on how much stress the banks can have during a bank run, before their liquidity is at stake.



A typical bank balance sheet looks like this (Figure 1). If the deposits get drained on the right side, the cash gets drained on the left side. The question is, how high is the limit of a drain on deposits?

Figure 1: Balance Sheet

Let's analyze the bank reserve requirements first. 

Chart 1: Reserve Requirements

Then we look at the capital and reserves of the banks. The capital and reserves are given in the last column (Table 1).

Table 1: Bank Statistics

Chart 2: Capital and Reserves to Deposit Ratio

Go here to read more.