Banks that actively manage liabilities will most likely meet a reserve shortfall by

Question

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When banks actively manage liabilities, they are focused on maintaining a stable source of funding for their operations. Therefore, in the event of a reserve shortfall, the best option for them would be to borrow federal funds from other banks or from the Federal Reserve. Calling in loans or seeking new deposits can disrupt their funding sources and harm their reputation, while selling municipal bonds may not be a quick or feasible option to meet immediate reserve needs.

Banks That Actively Manage Liabilities Will Most Likely Meet a Reserve