ELI5: Explain Like I'm 5

Excess reserves

Excess reserves are the amount of extra money that banks hold onto instead of loaning it out. Banks are required to keep a certain amount of money in their “reserves”, kind of like a savings account, but they can choose to keep more than they are required to. This extra money is called excess reserves. Banks keep these reserves so that they can make loans to customers, buy investments, or cover any deposits that people might want to take out.