How banks work
Right side: Assets
Assets
-Reserves
>required reserves (rr) - percent required by the fed to keep on hand to meet demand
>excess reserves (er) - percent reserves over and above the amount needed to satisfy the minimum reserve ratio set by the fed
-Loans to firms, consumers, and other banks
-Loans to government - treasury securities
-Bank property - if bank fails you could liquidate the bank property.
Left side: liabilities
Liabilities
- Demand deposits
-CD's
-Loans from federal reserves and other banks
-Shareholders equity
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