Required reserves for a commercial bank
A) are the minimum reserves that a bank must hold to back its deposits.
B) are the reserves that a bank plans to hold in the bank's vault.
C) are only the money used by the bank tellers.
D) consist only of the bank's deposits at the Fed.

Question

Quizplus · Accepted Answer

Required reserves are the minimum amount of reserves a bank must hold as mandated by the central bank or regulatory authority, primarily to back its deposits and ensure liquidity. This ensures that the bank can meet its depositor's demands.

Required Reserves for a Commercial Bank