Bank reserves are:

Question

Bank reserves are:

Quizplus · Accepted Answer

Bank reserves refer to the portion of deposits that a bank keeps in the form of very liquid assets such as cash or deposits with the central bank. These reserves are kept to ensure that the bank can meet its obligations to depositors and other creditors. The fraction of deposits kept in gold with the Bank of Canada (choice A) is not accurate as banks do not typically hold significant amounts of gold as reserves. Deposits lent to finance illiquid investments (choice B) do not qualify as reserves as they are not immediately available to meet obligations. While gold kept in the bank's vault (choice D) is a type of asset, it does not qualify as reserves as it is not as liquid or easily accessible as cash or deposits with the central bank.

Bank Reserves Are