Central banks are one of the key participants in global financial systems given their role in formulating monetary policy thus impacting interest rates, credit and money supply and therefore economic growth and inflation.

A) Consider a bank policy to maintain 15% of deposits as reserves with the Reserve Bank of Australia. The bank currently has US$150 million in deposits and holds US$4.75 million in excess reserves. What is the required reserve on a new deposit of U$11 million?

Answer rating: 100% (QA)

To calculate the required reserve on a new deposit of US11 million we need to determine the reserv... View the full answer