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Compliance with the existing required reserves ratio

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Reference no: EM13195235

The Friendly National Bank holds $50 million in reserves atits Federal Reserve District Bank. The required reserves ratio is12 percent.

a. If the bank has $600 million in deposits, what amount ofvault cash would be needed for the bank to be in compliancewith the required reserves ratio?

b. If the bank holds $10 million in vault cash, determine the required reserves ratio that would be needed for the bank toavoid a reserves deficit.

c. If the Friendly National Bank experiences a required reserves deficit, what actions can it take to be in compliance with the existing required reserves ratio?

Reference no: EM13195235

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