Assets Liabilities & Capital Risk Weight for Assets
Reserves 10 Checkable Deposits 60 Reserves 0%
T-bills 5 Saving Account 97 T-bills 0%
Agence MBS 50 Capital 8 Agency MBS 20%
Loan 100 Loan 100%
Total 165 Total 165
Assume the required reserve is 10% and the capital requirement is 5%, does this bank meet the regulation on reserves and capital?
Suppose that 5% of loan is written off (loan cannot be collected). Does this bank still meet the regulation on capital?
Assume some depositors of bank A transfer $5 mil from their saving accounts to an another bank. Recommend one solution for bank A so they can comply with reserves requirement.