If the Fed lends five banks a total of$\backslash (100$million but depositors withdraw $\backslash )50$million and hold it as currency, what happens to reserves and the monetary base? Use T-accounts to explain your answer.

A bank is a monetary organization that accepts deposits from people in general and give interest in return while at the same time extending loans to lenders.

Assume the Fed loans a sum of $\$100$million to five banks, however contributors pull out $\$50$million and hold it as money. The accounting report of the financial framework and the Federal Reserve System changes as follows:

The Banking System just gains $\$50$million for possible later use not with standing the $\$100$million credit since investors have removed $\$50$million from the Banking System.

The monetary base increments by $\$100$million on the grounds that the monetary liabilities of the Fed have expanded by this sum.

The Banking System just gains $\$50$million for possible later use notwithstanding the $\$100$million credit since investors have removed $\$50$million from the Banking System.

The monetary base increments by $\$100$million on the grounds that the monetary liabilities of the Fed have expanded by this sum.