Secondary or buffer reserves are:
A)non-reserve assets that can be quickly turned into cash or used to provide collateral for repurchase agreements and other bank borrowing
B)illiquid securities
C)used to pay dividends
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

Secondary or buffer reserves are non-reserve assets that can be quickly turned into cash or used as collateral to obtain funds from other sources such as repurchase agreements or borrowings from other banks. They provide a secondary level of protection to ensure that banks can meet unexpected liquidity needs. Options B and C are incorrect as buffer reserves are not illiquid securities and are not used to pay dividends.

Secondary or Buffer Reserves Are