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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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