Question
A US Bank has estimated that its average daily net transaction accounts balance over the recent 14-day reserve computation period was $250 million. The average
A US Bank has estimated that its average daily net transaction accounts balance over the recent 14-day reserve computation period was $250 million. The average daily balance with the Fed over the 14-day maintenance period was $7 million, and the average daily balance of vault cash over the two-week computation period was $7.5 million. Under the rules effective in 2015, what is the amount of average daily reserves required to be held during the reserve maintenance period for these net transaction accounts balances?
<$14.5 million | 0% |
$14.5 million - $103.6 million | 3% |
>$103.6 million | 10% |
Define credit rationing. Discuss how financial institutions use it to control credit risks with respect to retail and wholesale loans.
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