---
entity_slug: bank_reserves
evaluator: null
evaluated_at: '2026-02-23T00:49:46.946199'
overall_score: 4.6
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition clearly specifies bank reserves as gold and silver money
    held for note redemption, with precise functional criteria (meeting redemption
    demands) and key variables (circulation quantity, public confidence). It avoids
    circularity and captures a distinct operational concept.
- name: source_grounding
  value: 5.0
  max_value: 5.0
  rationale: This entity is directly grounded in Smith's detailed analysis of banking
    operations in Book II, Chapter 2, where he extensively discusses the relationship
    between note circulation, reserve requirements, and bank stability. The concept
    emerges naturally from Smith's examination of banking mechanics.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: '"Regulation" is the correct domain placement, as bank reserves represent
    a regulatory mechanism that constrains and governs banking behavior. This is fundamentally
    about the internal controls and operational limits that ensure bank viability.'
- name: vsm_relevance
  value: 4.0
  max_value: 5.0
  rationale: This entity maps well to S3 (internal regulation/audit) as reserves function
    as an internal control mechanism that monitors and regulates bank operations.
    It also has some S2 relevance as a coordination mechanism that prevents oscillations
    between over-issuance and insolvency.
- name: explanatory_value
  value: 5.0
  max_value: 5.0
  rationale: "Bank reserves illuminate a crucial structural mechanism in Smith's banking\
    \ theory\u2014how the constraint of maintaining adequate reserves creates a feedback\
    \ loop that regulates note issuance and ensures system stability. This reveals\
    \ the underlying mechanics of banking viability rather than just naming a surface\
    \ phenomenon."
---

# Evaluation: Bank Reserves

## definition_precision — 4.0 / 5.0

The definition clearly specifies bank reserves as gold and silver money held for note redemption, with precise functional criteria (meeting redemption demands) and key variables (circulation quantity, public confidence). It avoids circularity and captures a distinct operational concept.

## source_grounding — 5.0 / 5.0

This entity is directly grounded in Smith's detailed analysis of banking operations in Book II, Chapter 2, where he extensively discusses the relationship between note circulation, reserve requirements, and bank stability. The concept emerges naturally from Smith's examination of banking mechanics.

## domain_placement — 5.0 / 5.0

"Regulation" is the correct domain placement, as bank reserves represent a regulatory mechanism that constrains and governs banking behavior. This is fundamentally about the internal controls and operational limits that ensure bank viability.

## vsm_relevance — 4.0 / 5.0

This entity maps well to S3 (internal regulation/audit) as reserves function as an internal control mechanism that monitors and regulates bank operations. It also has some S2 relevance as a coordination mechanism that prevents oscillations between over-issuance and insolvency.

## explanatory_value — 5.0 / 5.0

Bank reserves illuminate a crucial structural mechanism in Smith's banking theory—how the constraint of maintaining adequate reserves creates a feedback loop that regulates note issuance and ensures system stability. This reveals the underlying mechanics of banking viability rather than just naming a surface phenomenon.
