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What is Meant by Cash Reserve Ratio (CRR). Define Cash Reserve Ratio.
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Cash Reserve Ratio (CRR) refers to the legally required cash reserves of the commercial banks with the central bank as a percentage of the total deposits.

When CRR is reduced (as during the deflation), credit creation capacity of the commercial bank is enhanced. This increases the flow of credit in the Economy. To decrease the flow of credit (as during the inflation), Cash Reserve Ratio is raised.

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