What does a bank do when it cant satisfy the reserve requirement?

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1064032

2026-02-23 13:30

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When a bank cannot meet its reserve requirement, it may seek to borrow funds from other banks or financial institutions, typically through the Federal Reserve's discount window. Alternatively, the bank might sell assets or securities to raise the necessary cash. If the shortfall persists, it could lead to regulatory scrutiny and potential penalties, impacting the bank's operations and financial stability. Ultimately, failing to satisfy reserve requirements can undermine customer trust and the overall health of the banking system.

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