When banks use stored liquidity management, they
A. must pay interest on the funds that are stored.
B. store the funds at the U.S. Treasury.
C. necessarily increase the asset side of the balance sheet.
D. may shrink the balance sheet if cash is used as the liquidity adjustment mechanism
E. threaten the capital position of the institution.
Ans: D. may shrink the balance sheet if cash is used as the liquidity adjustment mechanism
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