ECONS 305: Money and Banking

2. The bank that you own has the following balance sheet: Assets Liabilities Reserves $ 60 million Deposits $500 million Securities $120 million Bank capital $100 million Loans $420 million a) Record a bookkeeping immediately after the bank suffers a deposit outflow of $50 million when a required reserve ratio on deposits is 10%. What problem do you see on the T-account after the event? Assets Liabilities Reserves Deposits Securities Bank capital Loans b) What action(s) you want to take to rectify the situation? Make your suggestion(s) in terms of the T-account and explain them. Assets Liabilities