Superior Savings Bank Is Holding $20 Million in Deposits, with a 10

Superior Savings Bank is holding $20 million in deposits, with a 10 percent reserve requirement. As a result, the bank must have reserves of $2 million. If the Federal Reserve Board reduced the reserve requirement to 5 percent, what would this mean for Superior Savings Bank?

A) The bank could lend to customers the $1 million difference between the old reserve level and the new lower reserve level.
B) The bank would be grandfathered into the old reserve level, so nothing would change.
C) The bank could decide whether to keep the old reserve level or switch to the new lower reserve level.
D) The bank would have to ask the Federal Reserve Board for permission to switch to the new lower reserve level.
E) The bank would have to check with its customers before switching to the new lower reserve level.