Which of the Following Statements About the Deposit Facility in the Eurosystem

question 16

Multiple Choice

Which of the following statements about the deposit facility in the Eurosystem are correct?

• A)Banks are paid an interest rate that is typically 100 basis points below the target financing rate.
• B)The prespecified interest rate on the deposit facility provides a floor for the overnight market interest rate.
• C)The interest rate on reserves set by the ECB is not always positive.
• D)All of the above.
• E)Only A and B.

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Definitions:

Bank Balance

The amount of money held in a bank account at a given moment.

Cash Account

An account that records all transactions involving cash, including receipts and payments.

Debit Balances

Balances in accounts that represent amounts spent or assets, as opposed to credits, which signify income or liabilities.

Assets

Economic resources controlled or owned by a business or individual, which have future economic value.