Final answer:
Special Reserve Account (SRA) computations are used by depository institutions to calculate their reserve requirements based on Federal Reserve's Regulation D. These requirements ensure banks hold a certain percentage of depositors' money as reserves to ensure stability and liquidity.
Step-by-step explanation:
The question is about computations related to the Special Reserve Account (SRA), which are required for depository institutions to determine the dollar amount of their reserve requirement. The reserve requirement is mandated by the Federal Reserve's Regulation D and is based on the institution's reservable liabilities, which include net transaction accounts and may include nonpersonal time deposits and eurocurrency liabilities. However, since December 27, 1990, these last two categories have had a reserve ratio of zero.
Reserve requirements are in place to ensure that banks have a certain amount of funds available in the form of vault cash or deposits with Federal Reserve Banks. Moreover, the Federal Reserve has the authority to change reserve requirements within limits set by law. While these requirements determine the minimum reserves a bank must hold, banks often hold additional reserves beyond the minimum to ensure additional safety and liquidity.
For instance, the 'Safe and Secure Bank' is holding $2 million in reserves, which demonstrates the practical application of maintaining reserves beyond the required minimum. These reserves are held as an asset by the bank and are not used for loans or investments, which means they do not generate interest income for the bank.