Bank A doesn't need to get a loan yet after the money is moved away to bank B, after all they kept a percentage of the original deposit, so they have sufficient reserves. Right?
Reserves are deposits with the central bank or cash sitting in the vault. Reserves are created when the central bank makes a direct loan which is typically to the central government or through the discount window (where they buy a loan at a discount from a member bank).
Reserve requirements essentially mean that each bank has to have some amount of deposits at the central bank that is proportional to the size of it's balance sheet. In theory that limits the total amount of money to a multiple of the amount of base money which is controlled by the central bank.
In practice central banks have been moving away from reserve requirements as a way to influence monetary policy and some countries have eliminated reserve requirements entirely. In the US cash and reserves doesn't pay interest and so acts as a tax on the banking system. When market rates are high like they were in the 70's and 80's this tax can be significant and at some points lead to banks leaving the Federal Reserve System all together and the creation of non-bank competitors for deposits such as money market funds.
Today most banks balance sheets are limited by regulatory capital ratios rather than reserve requirements.
A history of reserve requirements can be found here that lays it out in detail. I highly recommend it if you find yourself unable to sleep on a plane. Skip to the end if you are interest in current history:
Unfortunately there is a lot of bad information (and conspiracy theories) about fractional reserve banking on the internet which in many cases is outright wrong and in the best cases no longer relevant.
Reserve requirements essentially mean that each bank has to have some amount of deposits at the central bank that is proportional to the size of it's balance sheet. In theory that limits the total amount of money to a multiple of the amount of base money which is controlled by the central bank.
In practice central banks have been moving away from reserve requirements as a way to influence monetary policy and some countries have eliminated reserve requirements entirely. In the US cash and reserves doesn't pay interest and so acts as a tax on the banking system. When market rates are high like they were in the 70's and 80's this tax can be significant and at some points lead to banks leaving the Federal Reserve System all together and the creation of non-bank competitors for deposits such as money market funds.
Today most banks balance sheets are limited by regulatory capital ratios rather than reserve requirements.
A history of reserve requirements can be found here that lays it out in detail. I highly recommend it if you find yourself unable to sleep on a plane. Skip to the end if you are interest in current history:
https://www.federalreserve.gov/monetarypolicy/0693lead.pdf
Unfortunately there is a lot of bad information (and conspiracy theories) about fractional reserve banking on the internet which in many cases is outright wrong and in the best cases no longer relevant.