About banks problem...?

Question

-If banks are required to hold reserves at the Bank Negara Malaysia (Central Bank), doesn’t that mean that the required reserves are not really reserves at all and that the only true reserves that the banks hold are their excess reserves? Critically evaluate this view.
-Bank deposits in Bank Simpanan Nasional in Malaysia are insured against the risk of failure by the government but not in other commercial banks. What are the pros and cons if Bank Negara Malaysia instructs that bank deposits in all commercial banks must also be insured against the risk of failure?

Answer 1

1. They are true reserves in that the bank can use them in emergency to stop a run on the bank.

2. The chief pro is fairness - a level playing-field for all banks.