The difference between a commercial bank's borrowing reserves from the Fed and borrowing them from another commercial bank is that:

Question

Quizplus · Accepted Answer

When a commercial bank borrows reserves from the Federal Reserve, it effectively increases the total reserves in the banking system because the Fed can create money. In contrast, when a bank borrows from another bank, it's merely transferring existing reserves from one institution to another, not increasing the total reserves in the system.

The Difference Between a Commercial Bank's Borrowing Reserves from the Fed