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The average daily net transaction accounts of a local bank during the most recent reserve computation period is $331 million. The amount of average
The average daily net transaction accounts of a local bank during the most recent reserve computation period is $331 million. The amount of average daily reserves at the Fed during the reserve maintenance period is $25.20 million, and the average daily vault cash corresponding to the maintenance period is $4.4 million. EXAMPLE 13-2 Computation of Daily Average Required Reserves Consider ABC Bank's reserve manager, who wants to assess the bank's minimum cash reserve requirement target. The manager knows the bank's net transaction accounts bal- ance at the close of the banking day on each of the 14 days over the period Tuesday, June 30, to Monday, July 13. Consider the realized net transaction account positions of ABC Bank in Table 13-25. The minimum daily average reserves that a bank must maintain is computed as a percentage of the daily average net transaction accounts held by the bank over the two-week computation period, where Friday's balances are carried over for Saturday and Sunday. The minimum daily average for ABC Bank to hold against the daily average of $1,350.70 million in net transaction accounts is calculated as follows (amounts in millions): Daily average net transaction accounts x Reserve percentage = Daily average reserves required $15.2 $110.2-$15.2 $1,350.7-$110.2 0% 3 $ 0.000 2.850 10 124.050 Minimum average reserves to be held $126.900 a. Under the rules effective in 2020, what is the average daily reserve balance required to be held by the bank during the maintenance period? b. Is the bank in compliance with the reserve requirements? Complete this question by entering your answers in the tabs below. Required A Required B Under the rules effective in 2020, what is the average daily reserve balance required to be held by the bank during the maintenance period? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. (e.g., 32.161)) Average daily reserve required million
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