Compare and contrast the two types of reserves held by commercial banks in a modern banking system. (1 point)

Outline the advantages and disadvantages of holding reserves for commercial banks. (1 point)

Discuss whether currency is an asset or liability of a Central Bank.

Support your answer with a thorough explanation, using the concepts learnt in the course. (1 point)

Analyze the impact of each of the following events on the Central Banks balance sheet by writing your answers in the right column in the table below: (2 points)

Event or Transaction

Impact on the CB balance sheet

Maryam Al Falasi deposited her monthly salary of 4,000 into a Citi Bank ATM near her house.

Khaled Al Ameri took out a $40,000 loan from the First Abu Dhabi Bank to buy an engagement ring for his fianc.

Fouad Al Mansoori deposited a cheque worth 400,000 given to him by British Airways, his employer, into his bank account at HSBC.

The UAE Central Bank issued an AED 4,000,000 loan to Emirates NBD, one of the largest commercial banks in the country.