Brontsky & Co., a member bank of the Fed, receives a notice from the Fed that notifies that it must hold funds equal to 15% of the deposits held by its customers. In this scenario, the 15% is the _____.

Question

Quizplus · Accepted Answer

The notice from the Fed to Brontsky & Co. is regarding the requirement to hold funds as a reserve, which is known as reserve requirement. The other options (A) capital adequacy ratio, (B) capital requirement, and (D) statutory liquidity ratio are all different measures used by regulators but do not apply to this scenario.