Bank reserves include

Question

Quizplus · Accepted Answer

Bank reserves consist of vault cash (cash held in a bank's own vault) and deposits with the central bank of the country (in Canada, this is the Bank of Canada). Option A is the only choice that includes both of these elements.

Option B is incorrect because loans to bank customers are not part of bank reserves; rather, they represent assets on the bank's balance sheet.

Option C is incorrect because loans to bank customers are not part of bank reserves.

Option D is incorrect because customer chequing accounts are liabilities on the bank's balance sheet, not part of bank reserves.

Option E is incorrect because holdings of securities (like stocks and bonds) are not typically considered part of bank reserves; they are assets that can be sold or traded to generate liquidity if necessary, but they are not the same as cash or cash equivalents that can be used to meet reserve requirements.

Bank Reserves Include