Excess reserves refer to
A) Reserves that banks are required by law to hold
B) The major assets of the bank
C) Reserves a bank holds in case of unexpected case needs
D) Reserves over and above the bank's required reserves
E) None of the above

Question

Excess reserves refer to 
A) Reserves that banks are required by law to hold
B) The major assets of the bank
C) Reserves a bank holds in case of unexpected case needs
D) Reserves over and above the bank's required reserves
E) None of the above

Quizplus · Accepted Answer

Excess reserves are reserves that banks hold over and above the required reserves specified by the central bank. This additional amount of reserves is discretionary and can be used by banks in case of unexpected cash needs or to earn interest on overnight loans in the interbank market.

Excess Reserves Refer to