Which is the least costly way for a bank to handle deposit outflows?

Question

Quizplus · Accepted Answer

Holding excess reserves is the least costly way for a bank to handle deposit outflows. This is because it does not involve any additional costs such as interest payments or selling off assets. By holding excess reserves, the bank can easily meet any withdrawal requests without having to rely on borrowing from other banks or selling securities. However, holding excess reserves does come with an opportunity cost as the bank could have used those funds to generate profits through loans or investments.

Which Is the Least Costly Way for a Bank to Handle