Which of the following statements is correct about the commercial banks' reserves kept as deposits at the Federal Reserve?
A) Commercial banks don't have access to their reserves at the Fed.
B) Commercial banks write checks to other banks on their reserve accounts at the Fed.
C) Commercial banks can make loans to commercial customers out of these reserves.
D) The reserves are the banks' only assets.

Question

Quizplus · Accepted Answer

Commercial banks write checks to other banks on their reserve accounts at the Fed. This process is called interbank lending and it helps to maintain the stability of the banking system. Commercial banks can also use their reserves to meet reserve requirements set by the Federal Reserve and to clear transactions between themselves. However, reserves are not the banks' only assets - they also hold loans, investments, and other types of assets.

Which of the Following Statements Is Correct About the Commercial