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As of March 2020, the minimum reserve requirement for all deposit institutions was abolished, or more technically, fixed to zero percent of eligible deposits. We
As of March 2020, the minimum reserve requirement for all deposit institutions was abolished, or more technically, fixed to zero percent of eligible deposits. We studied required reserves in Ch9 (see the Problem set 3 in the following picture) which prevents the liquidity risk. Now there is no minimum reserve requirement, does that mean there will be liquidity risk in the banking system? Please provide your reason as well.
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