Final answer:
The term that describes the proportion of deposits banks must hold in reserve and cannot loan out or invest is called the 'reserve ratio'. It's a regulatory measure set by the Federal Reserve to ensure liquidity and stability in the banking system.
Step-by-step explanation:
The term you are looking for is reserve ratio. This term describes the proportion of deposits that banks must hold as reserves and are not allowed to loan out or invest in securities such as bonds. It is a regulatory requirement set by the Federal Reserve, and the amount of reserves required is typically expressed as a percentage of the banks' deposit liabilities. The reserve ratio is used as one of the tools to control liquidity in the banking system and to help ensure its stability. Banks are sometimes required to hold more than the minimum reserve ratio, which provides an additional safety margin.