compensating balance

[kom-puhn-sey-ting bal-uhns]

noun

1. Also compensated balance, compensation balance. a balance wheel in a timepiece, designed to compensate for variations in tension in the hair spring caused by changes in temperature.

2. Banking.,  a deposit balance that is required to be left on deposit by a company to maintain or guarantee credit.

Word History and Origins

Origin of compensating balance¹

First recorded in 1795–1805