Question

The actual reason that banks must hold required reserves is: LO33.2 a. To enhance liquidity and deter bank runs. b. To help fund the Federal Deposit Insurance Corporation, which insures bank deposits. c. To give the Fed control over the lending ability of commercial banks. d. To help increase the number of bank loans.

Answer 1

The correct answer for the question that is being presented above is this one: "b. To help fund the Federal Deposit Insurance Corporation, which insures bank deposits." The actual reason that banks must hold required reserves is to help fund the Federal Deposit Insurance Corporation, which insures bank deposits.