Final answer:Thelegal reserve requirementis a mandated amount of money that banks need to keep in reserves. It serves to control the money supply, ensure the stability and integrity of financial institutions, and manage economic risks.Explanation:The primary purpose of the legal reserve requirement is to provide aframework to controlthemoney supplyin an economy and to ensure the stability and integrity of financial institutions. It refers to the minimum amount of money that a bank is required to keep in reserves, either as cash in their vault or deposited with the central bank.Thecentral bankcan also influence monetary policy by adjusting this requirement. If the reserve requirement is increased, it means banks have less money available to lend out which could slow down economic activity. On the other hand, lowering the reserve requirement increases the amount banks can lend, stimulating economic activity.Banks might also hold more reserves than legally required, particularly during uncertain economic times. This is to protect against potential losses due to loan defaults. Hence, the reserve requirement serves as a vital instrument for risk management and economic stabilization.Learn more about Legal reserve requirement here:brainly.com/question/33476049#SPJ11...

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