The reserves of a bank include
A)the cash in its vault plus the value of its chequable deposits.
B)the cash in its vault plus any deposits held on account at the Bank of Canada.
C)the cash in its vault plus any gold held for the bank at the Bank of Canada.
D)all of its common stock holdings, the cash in its vault, and all deposits held on account with the Bank of Canada.
E)the cash in its vault plus any deposits held on account with the Bank of Canada plus the value of any government bonds that it holds.

Question

Quizplus · Accepted Answer

Reserves primarily consist of cash in the bank's vault and deposits held on account at the central bank, which in Canada is the Bank of Canada. Therefore, option B is the best choice. Option A is incorrect because it only includes chequable deposits and not all deposits held on account. Option C includes gold held for the bank, which may or may not be included in reserves. Option D is incorrect because common stock holdings are not typically considered part of a bank's reserves. Option E includes government bonds, which may be held for investment but are not considered part of a bank's reserves.

The Reserves of a Bank Include