Vault cash: cash held by banks
Reserve Ratio= Commercial bank’s required reserves /
Commercial bank’s Checkable-deposit liabilities
ER= AR – RR (required reserves)
AR= actual reserves
RR= checkable deposits * reserve ratio
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Assets
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Liabilities + equity
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Reserves
Required: required by FED. Keep on hand to meet demand
Excess: reserves over and above the amount needed to satisfy the
minimum reserve ratio set by FED
Loans to firms, consumers, and other banks
Loans to govt. = treasury securities
Bank property: (if bank fails you could liquidate the
building/property)
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Demand Deposits ($ put into banks)
Timed Deposits (CD’s)
Loans from: federal reserve and other banks
Shareholders’ equity: (to set up a bank, you must invest your own
money in it to have a stake in the bank’s success or failure)
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Listing what is an asset and what is considered as liabilities is very useful. It might also be important to note that both sides must equal each other as well as as mentioning that an asset is what you own and liabilities are what you owe.
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