International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz

Exercise 4

When a U.S. bank accepts a deposit from one of its foreign branches, that deposit is subject to the Fed's reserve requirements. Similarly, Fed reserve requirements are imposed on any loan from a U.S. bank's foreign branch to a U.S. resident, or on any asset purchase by the branch bank from its U.S. parent. What do you think is the rationale for these regulations?