Are you for or against central banks’ imposing reserve requirements for banks? Justify your answer please

Expert Solution

No , I am not against the central bank imposing reserve requirements for banks . central bank is a regulatory body for banks and financial institutions. central bank make a rule for banks that reserve a percentage of total fund of bank with central bank that called statutory liquidity ratio. banks can not use this fund without permission of central bank.

Central bank has power to manage money in the market and regulate the banks and financial institutions, to make consistent and balance flow/ supply of money in the country's market.

A bank's reserve requirement are the amount of funds that a bank holds in reserve to ensure that it is able to meet liabilities in case of sudden withdrawals.

there are several purposes for which central bank make this rule -

to regulate or increase or decrease the supply of money in the market
to maintain interest rates
to maintain inflation rates
to meet the emergency crisis of fund

therefore we can say that there are many purposes by considering these points we can say that we are in the favour of reserve requirements on banks imposing by central bank.

jeff jeffy answered 2 years ago

Is bail-in the preferred option for large or small banks? Justify your answer as a short...

Is bail-in the preferred option for large or small banks? Justify your answer as a short essay answer.

Please answer in microsoft word How does the US Central Bank compare to other Central Banks?

Answer the following. Justify your answer. (Can you please solve this simply or on paper simply?...

Answer the following. Justify your answer. (Can you please solve this simply or on paper simply? Thank you!) a) What are the 4 features of perfect competition? Using these features, is the market for table salt perfect competition (or close to perfect competition)? Explain each point. b) What 4 outcomes will a binding minimum wage have, and what 1 outcome has 2 possibilities. c) Describe economies of scope and economies of experience. Use a house builder as an example. d)...

Why does the Federal Reserve impose capital requirements on commercial banks?

Compare the structure and independence of the European System of Central Banks and the Federal Reserve...

Compare the structure and independence of the European System of Central Banks and the Federal Reserve System.

Define reserve management and explain how reserve management influences central banks decisions to restore stability in...

Define reserve management and explain how reserve management influences central banks decisions to restore stability in the financial stability in the economy. In what way(s) the central bank is powerful? Identify some of the factors that make the central bank influential over decisions concerning the society’s socio-economic development. How does the Central Bank of Bahrain conduct monetary policy? Can you provide some examples about the instruments used by the central bank of Bahrain to influence the macroeconomic variables in...

Explain the similarities and differences between the European System of Central Banks and the Federal Reserve...

Explain the similarities and differences between the European System of Central Banks and the Federal Reserve System.

Identify the central tendency you feel is the most representative of the data and justify your...

Identify the central tendency you feel is the most representative of the data and justify your answer. The total mean =54.97 The total median is 55 and the total Mode is 29 California 39 41 49 55 58 59 59 60 69 71 76 77 78 80 81 82 83 88 89 93 69.35 73.5 59 Conneticut 20 20 29 39 40 50 53 56 56 58 59 60 60 62 66 69 70 71 77 81 54.8 58.5 20...

You are Governor of the Central Banks of Wakanda (fictionalcountry…). Your country is small in...

You are Governor of the Central Banks of Wakanda (fictional country…). Your country is small in size, geographically located close to China, relies heavily on imports but you have your own currency. It is 2020 and you have decide whether to raise, lower or keep interest rates at current levels. What are some of your key considerations and why?

True or false. If your answer is false, you must justify your answer with a one...

True or false. If your answer is false, you must justify your answer with a one sentence explanation to receive any credit. 1. The theory of diversification says that we can eliminate unsystematic risk in an equity portfolio by holding a sufficient number of securities. 2. The CAPM predicts that a security with a beta of 0 will have an expected return of 0. 3. If asset A and asset B both have an expected return of .1, then any...

Question