Answer to Question #118246 in Macroeconomics for Kalpana

Question

If there is excess reserve along with target reserve ratio and cash drain, how it will be treated?

Answer 1

On the whole, it’s good, there will be a very strong financial airbag for the financial stability of the bank. On the other hand, these funds could be put into circulation in order to increase the profitability of the bank; alternative income is lost.