The reserves of a chartered bank consist of:
A)the amount of money market funds it holds.
B)the small deposits at the Bank of Canada and vault cash.
C)government bonds which the bank holds.
D)the bank's net worth.

Question

Quizplus · Accepted Answer

The reserves of a chartered bank consist of the small deposits they hold at the Bank of Canada (which is considered as the bank's deposit in its own name) and the vault cash. Option A is incorrect because money market funds are not considered as part of the bank's reserves. Option C is incorrect because government bonds are not considered as part of the bank's reserves. Option D is incorrect because a bank's net worth is not considered as part of the bank's reserves.

The Reserves of a Chartered Bank Consist Of