ABSTRACT
IN RECENT YEARS, REQUIRED RESERVES have been reduced or eliminated in many countries, particularly transitional economies, to remove resource allocation distortions and to counteract financial disintermediation. For example, the ratio of bank reserves to bank deposits fell from over 50 percent to under 20 percent in Estonia, 1991-1996, from 25 to 15 percent in Lithuania, 1993-1995, from 35 to 10 percent in Poland, 1988-1996, from 26 to 18 percent in Russia, 1993-1996, and from 80 to 18 percent in the Ukraine, 1992-1997 (International Financial Statistics, CD-ROM, March 1997).
