Central Bank Raises Reserve Requirement

Money at commercial banks has been scarce since what's known as the reserve requirement was increased in November of last year and now it's going to get even more scarce, because government is increasing the requirement by another 1%.

It's high tech finance talk but it has a real effect on the availability of money in the commercial banking system and in the economy. What the reserve requirement does is increase the amount of reserves the banks have to hold for every dollar it lends. That makes for less money in circulation, more money in the Central Bank, and it creates what the economists call a tight money situation. "Tight money" is usually reserved for tight times, when government needs to reign in spending but it also forces an overall economic slow-down.