Question: A U S savings bank has a daily average reserve balance
A U.S. savings bank has a daily average reserve balance at the Federal Reserve bank in its district of $25 million during the latest reserve maintenance period. Its vault cash holdings averaged $1 million and the savings bank's total transaction deposits (net of interbank deposits and cash items in collection) averaged $200 million daily over the latest reserve maintenance period. Does this depository institution currently have a legal reserve deficiency? How would you recommend that its management respond to the current situation?
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