pythonq2.py

Created on February 19, 2025
734 Bytes
RRR = required reserve ratio. It is the portion of bank
reserves (%of deposits) that cannot be lent to 
customers and must be kept as required reserves 
at the Central Bank. 
Required reserves = Deposits*RRR

Excess reserves are the funds that banks hold 
beyond the required minimum set by the central bank. 
They represent extra liquidity that banks can lend or invest
ER = Bank reserves - required reserves 

Money Multiplier is the maximum potential increase in the 
money supply when banks fully lend out their excess reserves.
MM = ER / RRR 

A customer withdraws 15,000€, what are the bank’s 
options to avoid defaulting? 
Sell bonds, 
sell loans (may be illiquid), 
borrow from the market, 
borrow from the CB