A commercial bank has mixed up the assets and liablities items as follows: (in $ thousand) Checkable deposits 80 Deposit with central bank 20 Cash on hand 20 Savings 120 Long-term loan to customer 150 Security (fixed rate) 80 Capital 120 Other assets 35 Borrowing from other bank 80 Time deposits 150 Short-term loan to customer 120 Deposit with other bank 65 Security (floating rate) 60   Rearrange the above items into a balance sheet of the bank If the required reserve ratio is 10% for checkable deposit and 5% for saving deposits and time deposits, does the bank hold any exess reserves? If yes, how much are they? What is the meaning of these excess reserves

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A commercial bank has mixed up the assets and liablities items as follows: (in $ thousand)

Checkable deposits	80
Deposit with central bank	20
Cash on hand	20
Savings	120
Long-term loan to customer	150
Security (fixed rate)	80
Capital	120
Other assets	35
Borrowing from other bank	80
Time deposits	150
Short-term loan to customer	120
Deposit with other bank	65
Security (floating rate)	60

 

1. Rearrange the above items into a balance sheet of the bank
2. If the required reserve ratio is 10% for checkable deposit and 5% for saving deposits and time deposits, does the bank hold any exess reserves? If yes, how much are they? What is the meaning of these excess reserves.
3. If customers withdraw 10 from checkable deposits and 20 from saving accounts,
   1. What will the bank’s balance sheet be? Using T-account
   2. What is the problem of this new balance sheet.
   3. How can the bank do to solve this problem