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by qnt 1309 days ago
Again no, neither of these are accurate. Modern banks do not operate on a fractional reserve basis at all. This is a falsehood peddled by well out of date undergrad econ textbooks

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...

1 comments

I'm describing what fractional reserve means. Technically that fraction has been set to zero very recently so it is trivial though still not false. This was discussed a lot elsewhere on this board.
If that you say is true then banks could lend infinite money to their friends and never collect it.
Well, except the friend part the money supply has never shrunk so far.