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by DalekBaldwin
1379 days ago
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The reserve ratio is one limiting factor among several that affect to what extent commercial banks can expand the money supply. For many decades leading up to the 2008 financial crisis, banks (in the US at least) extended loans up to this limit basically at all times, holding almost no excess reserves. Since then, they have not, and recently the Fed removed the reserve ratio requirement altogether: https://fred.stlouisfed.org/series/EXCSRESNW |
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