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Suppose a bank has $700 million in deposits and $30 million in required reserves, and it is holding no excess reserves. What is the required reserve ratio

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abiolataiwo2015

Suppose a bank has $700 million in deposits. The required reserve ratio is 4.3%.

Required reserve ratio

Using this formula

Required reserve ratio=Required reserves/deposits

Let plug in the formula

Required reserve ratio=$30 million/$700 million×100

Required reserve ratio=4.28%

Required reserve ratio=4.3% (Approximately)

Therefore the required reserve ratio is 4.3%.

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