Which of the following describes vault cash?

Vault cash refers to the physical currency that a bank holds in its vaults to meet the immediate cash demands of its customers and to satisfy legal reserve requirements. This cash is a crucial component of the bank's liquidity and serves as a buffer against withdrawals.

The definition aligns with the understanding that vault cash specifically represents cash reserves that banks keep on hand at their branches. It provides the necessary funds for daily transactions and ensures that banks can fulfill customer withdrawals without having to rely on deposits or transactions with other banks.

The other options do not capture the correct essence of vault cash. Deposits held by individuals pertain to customer savings and checking accounts, which are not the same as cash sitting in a bank's vault. Currency issued by the Central Bank refers to the broader supply of money in circulation but does not specifically point to the cash held by individual banks. Lastly, funds allocated for investment purposes relates to capital used for purchasing assets or securities, which is distinctly different from the cash reserves that support immediate liquidity needs in a banking context.