Final answer:
A Federal Reserve member bank must hold a higher reserve if it has deposits deemed riskier, such as large corporate deposits. The reserve requirement is a regulatory tool for financial stability and monetary policy management.
Step-by-step explanation:
A Federal Reserve member bank will be required to keep a higher percentage of its assets in reserve if its deposits consist primarily of larger or more volatile sources, such as large corporate deposits or brokered deposits. This is because these types of deposits are considered to be riskier, as they are more likely to be withdrawn in large amounts on short notice, leading to liquidity issues for the bank.
The reserve requirement is a tool used by the Federal Reserve to help ensure financial stability and manage monetary policy by controlling the amount of funds that a bank has available to lend. The reserve a bank is holding includes cash in their vaults and money held at the Federal Reserve Bank. In excess of the Minimum Reserve Requirements, banks might also hold additional reserves to ensure further financial security.