Regulators require a bank to hold some of its assets as reserves mainly to address:

Name: Regulators require a bank to hold some of its assets as reserves mainly to address:
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Reserves are mainly held to address liquidity risk, which refers to the risk that a bank may not have enough cash on hand to meet its obligations. By holding reserves, banks are better able to manage their liquidity and ensure that they can meet their short-term obligations.

Regulators Require a Bank to Hold Some of Its Assets