The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must possess funds that are equal to 48% of the deposits held by their customers. In the given scenario, the central banking system's notice exemplifies _____.
A)full-reserve banking
B)the statutory framework
C)the reserve requirement
D)statutory liquidity ratio

Question

Quizplus · Accepted Answer

The central banking system's notice exemplifies the reserve requirement, which is the percentage of deposits that commercial banks are required to hold in reserve to ensure liquidity and stability in the banking system.

The Central Banking System in the Country of Darmos Issues