A cheque for $10,000 drawn on Bank A by a depositor and deposited in Bank B will increase the excess reserves in Bank B by $10,000.

Question

Quizplus · Accepted Answer

When a cheque is deposited in Bank B, it increases Bank B's reserves, but it also decreases Bank A's reserves by the same amount. The net effect on the banking system's total reserves is zero, and the increase in excess reserves for Bank B depends on its reserve requirements.

A Cheque for $10,000 Drawn on Bank a by a Depositor