Bank Reserves and Bank Deposits

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Hassam Patoli

Bank Reserves and Bank Deposits
Bank Reserves:
Bank reserves are the currency deposits which are not lent out to the bank's clients. A small fraction of the total deposits is held internally by the bank or deposited with the central bank. Minimum reserve requirements are established by central banks in order to ensure that the financial institutions will be able to provide clients with cash upon request.

Bank Deposits:
Money placed into a banking institution for safekeeping. Bank deposits are made to deposit accounts at a banking institution, such as savings accounts, demand deposits, checking accounts and time deposits. The account holder has the right to withdraw any deposited funds, as set forth in the terms and conditions of the account. The "deposit" itself is a liability owed by the bank to the depositor (the person or entity that made the deposit). Types of Bank Deposits: • • • • Demand Deposits Checking Accounts Deposits Saving Deposits Time Deposits

Demand Deposits Funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution. Demand deposits can be "demanded" by an account holder at any time. Many checking and savings accounts today are demand deposits and are accessible by the account holder through a variety of banking options, including teller, ATM and online banking. Checking Accounts Deposits A transactional deposit account held at a financial institution that allows for withdrawals and deposits, and it is also known as a "demand account" or "transactional account".

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Hassam Patoli

Money held in a checking account is very liquid, and can be withdrawn using checks, automated cash machines and electronic debits, among other methods. A checking account differs from other bank accounts in that it often allows for numerous withdrawals and unlimited deposits, whereas savings accounts sometimes limit both. Checking accounts can include business accounts, student accounts and joint accounts along with many other types of accounts which offer similar features. Saving Deposits A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate. Depending on the specific type of savings account, the account holder may not be able to write checks from the account (without incurring extra fees or expenses) and the account is likely to have a limited number of free transfers/transactions. Savings accounts are generally for money that you don't intend to use for daily expenses. Time Deposits A savings account or certificate of deposit (CD) held for a fixed-term, with the understanding that the depositor can make a withdrawal only by giving notice. A time deposit is an interestbearing bank deposit that has a specified date of maturity. A bank is authorized to require depositors to give 30 days’ notice before withdrawing funds from a savings account; however, passbook accounts are typically considered readily available funds and account holders can make withdrawals without giving advance notice. Certificates of deposit are issued for a specified term, such as 30 days (the minimum) up to five years. Although funds can be withdrawn from CDs without notice (on demand), there are penalties for early withdrawal.

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