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A
member bank describes a bank that is
recognized as being part of the
Federal Reserve System. In order to be
considered a member bank, a bank must be willing
to meet and maintain certain requirements outlined
by the Federal Reserve System. It must purchase
stock in the Federal Reserve which must be
allocated in a certain manner. It must maintain a
certain percentage of its deposits in its vaults
and another percentage at the Federal Reserve
branch in its district. Such deposits help ensure
member banks have the necessary resources
(currency) on hand, every day, to handle the
financial transactions that might arise. |
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