The Cash Reserve Ratio (CRR) is a regulation set by central banks that requires commercial banks to hold a certain percentage of their total deposits in cash reserves. This means that banks must keep a portion of their deposits in the form of cash, either in their vaults or with the central bank, ensuring they have enough liquidity to meet customer withdrawals and other obligations. The CRR is an important tool for monetary policy, as it helps control the money supply in the economy. By adjusting the CRR, central banks like the Reserve Bank of India or the Federal Reserve can influence lending rates and overall economic activity, promoting stability and growth.