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BSW Bank currently has $950 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent
BSW Bank currently has $950 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits a. If the Federal Reserve decreases the reserve requirement to 4 percent, show the balance sheet of BSW and the Federal Reserve System just before and after the full effect of the reserve requirement change Assume BSW withdraws all excess reserves and gives out loans, and that borrowers eventually return all of these funds to BSW in the form of transaction deposits. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.) Panel A: Initial balance sheets Federal Reserve Bank Assets Liabilities s million (Click to select) (Click to select) BSW Bank Assets Liabilities million Click to select (Click to select) (Click to select) On Panel B: Balance sheet after all changes Federal Reserve Bank Assets Liabilities (Click to select) million Click to select) BSW Bank Assets Liabilities million Click to select (Click to select) (Click to select) On million million million million
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