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by marcosdumay 1189 days ago
It can absolutely be controlled. That's what reserve requirements do.

It's just out of fashion for central banks to control it. (For several reasons that exist, but I'm not sure are good ones.)
1 comments
bombcar 1189 days ago
Reserve requirements (unless they go to 100%, but then you can't loan at all off deposit accounts) don't prevent the bank from "loaning out money already loaned" but they do help reduce the chance of a run.
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marcosdumay 1189 days ago
They don't prevent money multiplication, they control money multiplication.

If a country has reserve requirements that are larger than the banks safety margins, the central bank has complete control on the size of M1.

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