Question

Suppose a bank has the following Balance Sheet accounts:

Loans (car loans, mortgages etc.) = $250,

bonds = $200,

Reserves = $100,

Capital = $75

Based on the above, how much, at a minimum, does the bank have to have in Reserves at the Fed? (Pre-covid)

Answer 1

As on January 16, 2020, It is required that all banks with more than $127.5 million on deposit maintain a reserve of 10% of deposits. Banks with more than $16.9 million up to $127.5 million must reserve 3% of all deposits. Banks with deposits of $16.9 million or less don’t have a reserve requirement.

In the above case, since the deposits/loan are $200 (less than $16.9 million), therefore, banks are not required to maintain any Reserves with FED.

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