The volume of currency and coin held by the public has a direct bearing on the reserves held by depository institutions.

Question

Quizplus · Accepted Answer

The volume of currency and coin held by the public affects the reserves of depository institutions because when the public holds more currency and coin, there are fewer deposits in banks, leading to a decrease in reserves. Conversely, when the public deposits more money into banks, reserves increase.

The Volume of Currency and Coin Held by the Public