(3/6) Creating a bank 

Transaction #2 

•Vault cash: cash held by the bank 

Transaction #3

•Commercial bank functions 

-accepting deposits 

-making loans 

Transaction #4 

•Depositing reserves in a federal reserve bank 

- required reserves

- reserve ratio 

Reserve ratio= commercial banks required reserves / commercial banks Checkable -deposit liabilities 

Excess reserves 

• actual reserves - required reserves 

•required reserves 

- checkable deposits x reserve ratio