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The idea is that these reserves are funded by repoing enough good assets at the discount window.
Suppose, for the sake of argument, that the repo haircut is 5%.
Then, in order to cover 100 worth of deposits you have to repo 105 worth of eligible assets.
The bank balance sheet could well consist of an additional 100 worth of debt on the liability side, 20 worth of equity, and 115 worth of other assets, which may or may not be eligible collateral for repos. To wit:
Assets | Liabilities ====================================== eligible assets 105 + x | debt 100 other assets 115 - x | deposits 100 | equity 20
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