Question
Assume that ABC bank has $20M in deposits, with a required reserve ratio of 10% it is holding $4M in required reserve. Cost savings and
Assume that ABC bank has $20M in deposits, with a required reserve ratio of 10% it is holding $4M in required reserve. Cost savings and customer service are important to the bank. There is a withdrawal for $5M? The bank is prepared to sell $1M in securities and to meet any further shortfall in reserves it will borrow from the central banks. Prepare a new balance sheet after the withdrawal. List assets and liabilities value
Details | Assets | Details | Liabilities |
Required reserves | 4,000,000 | Deposits | 20,000,000 |
Loans | 26,000,000 | Capital | 25, 000,000 |
Securities | 15,000,000 |
|
|
Total | 45,000,000 |
| 45,000,000 |
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