Define primary reserves of a bank, Financial Management

Assignment Help:

What are a bank's primary reserves? When the Fed sets reserve requirements, what is its primary goal?

Vault cash and deposits in the bank's account at the Fed are employed to satisfy these reserve needs; they are called primary reserves.  These types of primary reserves are non-interest-earning assets held by financial institutions.

The Federal Reserve needs all commercial banks to keep a minimum amount of reserves on hand to meet the withdrawal demands of its depositors and to pay another obligations as they come due.  Several would argue, though, that the reserve requirement is set more with monetary policy in mind than to make sure that banks meet their depositors' withdrawal requests.

 

 


Related Discussions:- Define primary reserves of a bank

International monetary system, what is the criteria for a good internationa...

what is the criteria for a good international financial system

Institutional clearing member, Institutional Clearing Member (ICM) A Fi...

Institutional Clearing Member (ICM) A Financial Institution has to subscribe to at least 100 equity shares of Rs.10,000 each to become an Institutional Clearing Member of COFEI

Case study - volatility trading, Case Study: Volatility Trading (a) The...

Case Study: Volatility Trading (a) The understanding in this case study deal with Convertible as well as Reverse-Convertible bonds. These are interesting instruments by themsel

Treasury notes or t-notes, Treasury Notes or T-notes are the securiti...

Treasury Notes or T-notes are the securities issued with maturities of more than one year and but not more than 10 years. All these securities are coupon securiti

Integration of economic, a) Globalisation refers to the interdependence and...

a) Globalisation refers to the interdependence and integration of economic, social and politic issues (services, goods, people and capital), across the world. For example, consumer

Eurobonds, The term 'Eurobonds' refers to bonds issued and sold outsi...

The term 'Eurobonds' refers to bonds issued and sold outside the home country of the currency. For example, a dollar denominated bond issued in the UK is a Euro (

Understanding financial metrics and business risk, Controlling is an essent...

Controlling is an essential management function as efficient control mechanisms ensure that the performance of the company increases over time through the incorporation of feedback

Amortizing/non-amortizing assets, The asset that acts as a coll...

The asset that acts as a collateral for an asset-backed security can either be an amortizing or a non-amortizing asset. In an amortizing asset,

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd