Bankers' concerns regarding the optimal mix of excess reserves,secondary reserves,borrowings from the Fed,and borrowings from other banks to deal with deposit outflows is an example of
A)liability management.
B)liquidity management.
C)managing interest rate risk.
D)managing credit risk.

Question

Quizplus · Accepted Answer

Bankers' concerns regarding the optimal mix of excess reserves, secondary reserves, borrowings from the Fed, and borrowings from other banks to deal with deposit outflows is an example of liquidity management. Liquidity management involves managing a bank's ability to meet its short-term obligations, such as deposit withdrawals, by maintaining an adequate level of liquid assets. Therefore, the optimal mix of reserves and borrowings is critical to ensure that the bank has sufficient liquidity to meet its obligations.

Bankers' Concerns Regarding the Optimal Mix of Excess Reserves,secondary Reserves,borrowings