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  3. Fractional reserve banking is the practice of keeping only a traction of deposits in the form of reserves. Depository institutio

Fractional reserve banking is the practice of keeping only a traction of deposits in the form of reserves. Depository institutio

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问题     Fractional reserve banking is the practice of keeping only a traction of deposits in the form of reserves. Depository institutions(commercial banks, savings and loan associations, mutual savings banks, and credit unions)are able to do this because only a small fraction of their depositors is expected to turn up during any given day or week to withdraw their deposits. The bulk of deposits is invested in financial assets, from which the depository institutions earn most of their income.
    Those income-earning financial assets range from bills, notes, and bonds issued by private corporations and by the federal, state, and municipal governments to mortgage loans for housing. Each type of financial institution has a different type of portfolio of assets, which reflects their area of special expertise in managing financial assets.
    To demonstrate how depository institutions create money under the present system of fractional reserve banking, hypothetical example of a commercial bank, Southwest National Bank, will be used. It is assumed that federal regulations require Southwest National Bank to hold a percentage of its deposits in the form of cash reserves. This is the reserve requirement. The reserves may be held in the form of currency and coin on the premises, a form of reserves called vault cash, or they may be held in a deposit at a regional Federal Reserve Bank.
    Assume that the Southwest National Bank management, taking into account the reserve requirement and the projected amount of withdrawals arid deposits, decides to keep 20 percent of its deposits in rescues.
What is the reserve requirement?
选项 A、The requirement for cash reserves.
B、The requirement for deposits in cash.
C、The percentage of a bank’ s deposits in the form of cash reserves.
D、The requirement of a bank to deposit a percentage of money.
答案C
解析 文章倒数第二段提到It is assumed that…This is the reserve requirement．采取的是现金的形式。
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本试题收录于： FECT综合（现代金融业务）题库金融英语（FECT）分类
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