Before borrowing from the Federal Reserve to meet its required reserve…

Question

Before borrowing from the Federal Reserve to meet its required reserves, a bank is expected to:

Accepted Answer

A. Borrow from other banks first

1. Lending by the central bank is a backstop rather than a first stop.
2. Ordinary funding markets should be tried before it.
3. The bank is expected to first borrow from other available sources, like other banks.
4. So other banks come first.
_Source: OpenStax Principles of Macroeconomics 3e (CC BY 4.0), Ch 15 'Monetary Policy and Bank Regulation', sections 15.1-15.5_

Answer

Borrow from its own staff first

Answer

Borrow from its largest client

Answer

Borrow from a foreign treasury

Before borrowing from the Federal Reserve to meet its required reserves, a bank is expected to:

Keep practising Monetary Policy and Bank Regulation