What is Constant Reserve Rate (CRR)?

The constant reserve rate (CRR) or constant reserve ratio, is the amount of cash that commercial banks must hold to protect their long-term viability in case a bank run occurs and customers rush to withdraw all their funds out of their accounts. The CRR takes into consideration the total amount of assets (including stocks, bonds, equities, derivatives, and other investment types) held by the bank. Commercial banks in the U.S. are regularly audited by the Federal Reserve to ensure their CRR is accurate and that they are operating in a fully compliant manner.