Excess Reserves are the amount of money that banks deposit at the Central Bank for safe keeping above and beyond what is necessary under the Reserve Requirement.

I have been fascinated by excess reserves since 2008, given that they reached $2.5 trillion – that is money banks decided not to lend to investors but instead stash away for safe keeping at the FED. Apparently Banks were less interested in the return ON their investment than in the return OF their investment.

Here is a good explanation of some of the reasons for excess reserves, unclear how relevant the explanation it is still today (since excess reserves are still seemingly inexplicably large).