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4. Assume that the banking sector's assets consist of the following items: Cash (i.e. currency plus banks' balances in the central bank) 10bn; Loans and

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4. Assume that the banking sector's assets consist of the following items: Cash (i.e. currency plus banks' balances in the central bank) 10bn; Loans and advances to customers 60bn; Bonds 15bn; Money market loans and bills 15bn. Assume that there are no other items. (a) What is the banking sector's current cash ratio? ............................................................... 10% (b) What is its current liquidity ratio? ..................................................................................... 25%

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