Commercial bank reserves, most of which are held by the Federal Reserve Banks, are:
A) A liability of the Federal Reserve Banks and commercial banks
B) An asset of the Federal Reserve Banks and commercial banks
C) A liability of the Federal Reserve Banks and an asset for commercial banks
D) An asset of the Federal Reserve Banks and a liability for commercial banks

Question

Quizplus · Accepted Answer

Commercial bank reserves are considered a liability for the Federal Reserve Banks because they are deposits that commercial banks hold at the Fed. For commercial banks, these reserves are considered an asset because they represent funds that the banks can use to meet their reserve requirements or for other purposes.

Commercial Bank Reserves, Most of Which Are Held by the Federal