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When a Cheque Is Drawn Against Bank a and Deposited

question 54

Essay

When a cheque is drawn against bank A and deposited in another bank, the first bank loses reserves as the cheque is cleared.Yet the cheque collection involves no loss of reserves by the banking system.Explain what significance this has for the lending ability of the system as a whole.


Definitions:

Nerve Coverings

Protective sheaths around nerves, such as the myelin sheath, that help speed the transmission of nerve impulses.

Prematurely

Occurring or done before the usual or proper time; too early.

Age Of Viability

The age at which a fetus may survive outside the womb, typically considered to be around 24 weeks of gestation with medical support.

Attachment

An emotional bond that forms between individuals, often influencing patterns of interpersonal relationships throughout life.

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