Tuesday, June 16, 2009

cash held by banks

A bank's "cash" include (1) vault cash,or coins and paper currency actually held in the vaults of the bank, (2) deposits in the regional federal reserve bank, if the bank is a member of the system, and (3) deposits in other commercial banks. Only the first two categories may be considered as legal reserves by member banks in the federal reserve System, though all three 'cash' categories are considered as primary reserve available to each bank in meeting any requirements for ready money .

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