asked 92.7k views
3 votes
Why must banks keep money on reserve?

asked
User Niquan
by
8.6k points

1 Answer

4 votes

Answer:

Bank reserves are the cash minimums that must be kept on hand by financial institutions in order to meet central bank requirements. The bank cannot lend the money but must keep it in the vault, on-site or at the central bank, in order to meet any large and unexpected demand for withdrawals.

Step-by-step explanation:

answered
User Frank Myat Thu
by
8.2k points

No related questions found

Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.