Deposits held by a bank with other banks are designed to "pay" for correspondent banking services.

Question

Quizplus · Accepted Answer

Deposits held by a bank with other banks, often referred to as correspondent balances, are indeed used to compensate for the services provided by correspondent banks. These services can include transaction settlements, foreign exchange, and other financial services. The deposits serve as a way for banks to maintain a relationship and settle transactions without the constant transfer of funds.

Deposits Held by a Bank with Other Banks Are Designed