a. the federal reserve requires commercial banks to have reserves because multiple choice 1 reserves are needed for banks to earn money. reserves are a claim that commercial banks have against the federal reserve banks. this is the way the fed monitors bank solvency. reserves provide the fed a means of controlling the money supply. b. reserves are an asset to commercial banks but a liability to the federal reserve banks because multiple choice 2 these funds are cash belonging to the federal reserve banks, but they are a claim that the federal reserve banks have against commercial banks. they must be equal to determine net worth. these funds are cash belonging to commercial banks, but they are a claim that commercial banks have against the federal reserve banks. commercial banks and the federal reserve banks do not use the same accounting system.
