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by carapace
2286 days ago
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Well... > Fractional-reserve banking is the most common form of banking practised by commercial banks worldwide. It involves banks accepting deposits from customers and making loans to borrowers, while holding in reserve an amount equal to only a fraction of the bank's deposit liabilities. Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank. The minimum amount that banks are required to hold in liquid assets is determined by the country's central bank, and is called the reserve requirement or reserve ratio. Banks usually hold more than this minimum amount, keeping excess reserves. https://en.wikipedia.org/wiki/Fractional-reserve_banking It's a mighty pillar of our global economic systems or the biggest scam ever or both depending on who you ask. Anyway, if I understand correctly (and I don't, IANAEconomist), now the fraction is zero. But I don't know what that means and I suspect few do. It sounds like it means that banks can just write loans all day long and "poof" money into existence, but I've been told that that is somehow not the case. Higher economics is indistinguishable from numerology (in terms of semantic analysis) to me, so I shouldn't comment further. Hopefully someone more knowledgeable will show up and read the tea leaves for us. |
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