The requirement is the fraction of checkable deposits that banks must keep on hand as reserves either as currency or on deposit with the Federal Reserve.

The requirement you're referring to is known as the reserve requirement. This is a regulation set by the Federal Reserve that dictates the minimum amount of reserves a bank must hold against its deposit liabilities. These reserves can be held either in cash within the bank or as deposits with the Federal Reserve.

Here are the steps to understand this:

1. Banks receive deposits from customers: These are known as checkable deposits. Customers can withdraw these funds at any time.

2. Banks lend most of these deposits: Banks make money by lending out the deposits they receive. However, they can't lend out all the money, as they need to have some funds on hand for daily transactions and withdrawals.

3. The Federal Reserve sets the reserve requirement: This is the minimum percentage of customer deposits that banks must keep on hand. For example, if the reserve requirement is 10%, a bank that has $1,000,000 in customer deposits would need to keep$100,000 on hand as reserves.

4. Banks keep reserves in two ways: They can keep the money physically in the bank, or they can deposit the money with the Federal Reserve.

5. The purpose of the reserve requirement: This requirement is in place to ensure that banks have enough money to meet their customers' demands for withdrawals. It also helps to provide security for the banking system as a whole.

So, in summary, the reserve requirement is a regulation that ensures banks keep a certain fraction of their checkable deposits on hand, either as cash or on deposit with the Federal Reserve.