Question
Regarding the reserves and funding, which of the following statements are true? Holding cash as reserves at the central bank is optional and there is
Regarding the reserves and funding, which of the following statements are true?
Holding cash as reserves at the central bank is optional and there is no regulation imposed on the amount and holding period of the reserves. | ||
If your bank is not able to fund its minimum reserves assets with interbank borrowing and the central bank's credit facility, the remaining funding will come from the central bank's emergency liquidity assistance program. | ||
If a bank put all its excess reserves into the interbank lending market, it does not need to pay interest when use funding from the interbank borrowing market. | ||
The first form of funding from central bank, the credit facility, has a lower interest rate, but it is limited in availability, whereas the last source of funding, the emergency credit has a higher interest rate and is unlimited. |
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