A commercial bank's reserves are
A) liabilities to both the commercial bank and the Federal Reserve Bank holding them.
B) liabilities to the commercial bank and assets to the Federal Reserve Bank holding them.
C) assets to both the commercial bank and the Federal Reserve Bank holding them.
D) assets to the commercial bank and liabilities to the Federal Reserve Bank holding them.

Question

Quizplus · Accepted Answer

Reserves are considered assets to the commercial bank because they represent funds the bank can use. However, they are liabilities to the Federal Reserve Bank because they are deposits that the Fed must hold and potentially pay out.

A Commercial Bank's Reserves Are