Reserve Requirements are regulations set by central banks that determine the minimum amount of funds that commercial banks must hold in reserve against their deposit liabilities. This means that banks cannot lend out all the money they receive from customers; they must keep a certain percentage on hand to ensure they can meet withdrawal demands. These requirements help maintain stability in the banking system and control the money supply. By adjusting Reserve Requirements, central banks like the Federal Reserve can influence lending practices and economic activity, impacting inflation and overall economic growth.