What is the required reserve ratio mainly for?
A. To help banks earn more
B. To prevent fraud
C. To make sure banks can return depositors’ money
D. To raise money for the government
Answer (2)
The correct answer is letter C. To make sure banks can return depositors’ moneyBanks are required to keep a percentage of deposits as reserves (in the Philippines, the Bangko Sentral sets this). This ensures banks don’t lend all their money and can still return your savings when you need it.
The correct answer is C. To make sure banks can return depositors’ money.The required reserve ratio is the fraction of customer deposits that banks must keep on hand and not lend out. This ensures banks have enough cash available to meet withdrawal demands from depositors, helping maintain stability and trust in the banking system.
