Fractional Reserve Banking
Comments discuss, explain, and debate the concept of fractional reserve banking, including its mechanics, common misconceptions, and how banks lend out portions of deposits while maintaining reserves.
Activity Over Time
Top Contributors
Keywords
Sample Comments
Not sure as to the level of sarcasm you intended, but banks already do this[1].[1] https://en.wikipedia.org/wiki/Fractional-reserve_banking
He's referring to Fractional Reserve Banking, have a look at the wiki page for more info:https://en.wikipedia.org/wiki/Fractional_reserve_banking
"Fractional reserve banking" is the thing to look up but, yes.
but we have fractional reserve banking? so this isn't the case
Fractional reserve isn't how banking works: https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Mon...
Weird, and I thought fractional reserve banking was a thing.https://en.m.wikipedia.org/wiki/Fractional-reserve_banking
You should review the concept of "fractional reserve banking".
Correct. It's akin to fractional reserves [https://www.thebalance.com/what-is-fractional-reserve-bankin...]
That's not how fractional reserve banking works..
That's not how fractional reserve banking works.Say I deposit $100 in a bank. The bank has $100. Now, say the law requires a 10% reserve. They can lend $90--which they actually have. That person takes the loan, and deposits it in their bank. Now, there are $190 in deposits from the original $100. But the bank never lent money it didn't have. Instead, the money creation comes from the fact I get to treat my $100 deposit as good as cash on hand, even though 90% of it has been lent to