Hawaii visitor guide

Hawaii visitor guide for In fact, the required reserve ratio is the percent of customer deposits that banks must hold in the monetary policy 565 form of reserves. While banks may hold more than the minimum required amount, they are not allowed to hold less than that amount. As private sector banks typically are in business to increase shareholder wealth or firm value, they will not want to hold too much of their customers deposits in the form of what is called excess reserves. This is because banks may earn (expected) profit on these excess returns if they produce loans with these funds instead of simply holding onto them. Making loans is risky, though, as there is always the possibility of default. As such, some banks, for a variety of reasons, may actually decide to hold excess reserves, though typically this amount is not very large. Competition and the pursuit of profit tend to eliminate excess reserves. Hawaii visitor guide 2016.

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