reserve fund

In economics, a reserve fund, also known as a reserve account, can refer to several things. It can be an account that tracks the decline in an asset's value, such as for depreciation or bad debts. It can also represent an accrued liability, like for income taxes. Additionally, a reserve account can segregate profits or surplus for specific purposes, such as contingencies or replacing fixed assets.1

Central banks also hold gold reserves, which are funds of gold bullion or coin. Historically, these were used for war costs and to redeem bank notes. Today, gold reserves are primarily used for settling international transactions. Central banks themselves regulate the money supply and credit availability to promote economic stability.23