Table 1 contains a simplified balance sheet for a commercial financial institution.
| Assets | € billion | Liabilities & Equity | € billion |
|---|---|---|---|
| Cash & reserves | 15 | Customer Deposits | 590 |
| Balances at Central Bank | 55 | Short-term Borrowing | 60 |
| Government Securities | 120 | Other Liabilities | 120 |
| Loans to Customers | 610 | Shareholders' Equity | 80 |
| Other Assets | 50 | ||
| Total Assets | 850 | Total Liabilities & Equity | 850 |
From this balance sheet, it is most reasonable to conclude that this institution is
a threat to financial stability because it holds no equity capital.
an investment bank because the vast majority of its assets are held in cash.
highly liquid because over 70% of its assets are comprised of loans to customers.
most likely a commercial bank because its primary source of finance is customer deposits.
