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by ClumsyPilot
1651 days ago
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'If the bank creates too much money relative to the collateral, it risks a run on the bank.... This is called "fractional reserve banking". ' I dont fully understand the system, and its clear neither do you, or most people commenting here We have not been using fractional reserve banking for at least 60 years now, as you sibling comment and this paper by the bank of England Explains. The only thing limiting hiw much bank can loan are capital requirements in the rules passed by parliament. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... |
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It's still a fractional reserve system, at least in the US. The "capital requirements" sound like fractional reserve, too.