3 years ago

Why does a bank sometimes hold excess reserves?

2 answers:

5 0

The answer to the question above is "To maintain its liquidity if customers make demand whether its withdrawal or saving" based on the reserves meaning. A central bank holds the commercial banks excess of capital to maintain their liquidity. A bank will always have the liquidity risk to its business. This reserve is made to assure banks' liquidity.

tamaranim1 [39]3 years ago

5 0

To be sure it can meet its costumers' demands.

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