If the returned check is an electronic item that is not a representation of a ___________, Reserve Banks will indemnify a bank to which the check is returned if the bank incurs losses as a result of indemnities the bank would be required to make under Regulation CC in connection with a substitute check later created from the returned check. A Reserve Bank will not be liable, however, if the loss could be attributed to a lack of good faith or failure to exercise ordinary care on the part of any person who handled the item.

Question

Quizplus · Accepted Answer

The passage mentions "indemnities the bank would be required to make under Regulation CC in connection with a substitute check later created from the returned check." Therefore, the correct term is "substitute check" (B). The other options, "returning check," "cross check," and "returning item" are not mentioned in the passage.

If the Returned Check Is an Electronic Item That Is