Commercial banks maintain reserve accounts with Federal Reserve banks to reap the benefits of the high interest rates paid on those accounts.

Question

Quizplus · Accepted Answer

Commercial banks maintain reserve accounts with Federal Reserve banks primarily to meet reserve requirements and for the management of payment systems, not to reap benefits from high interest rates. Interest on reserves is a policy tool for the Federal Reserve, not a primary incentive for banks to hold reserves.

Commercial Banks Maintain Reserve Accounts with Federal Reserve Banks to Reap