Which of the following compose the reserves of a commercial bank?
A) demand deposits and time deposits
B) vault cash and deposits of the bank with the Federal Reserve
C) U.S. securities and stock equity
D) cash and U.S. securities

Question

Quizplus · Accepted Answer

Reserves of a commercial bank are composed of vault cash and deposits of the bank with the Federal Reserve. Demand deposits and time deposits are liabilities of the bank, not reserves. U.S. securities and stock equity are assets of the bank, but they do not constitute reserves. Cash and U.S. securities may be assets of the bank, but they do not necessarily constitute reserves unless they are held as required reserves with the Federal Reserve.

Which of the Following Compose the Reserves of a Commercial