It's called fractional reserve banking because they don't have gold in their vaults, except for specific ratios. Very, very few banks have gold, instead they ha

It's called fractional reserve banking because they don't have gold in their vaults, except for specific ratios. Very, very few banks have gold, instead they have government bonds. They don't have those in 1:1 either. In the EU: 2.5% of the value of your deposits the banks own in bonds. In the US: complex, but let's give a simple, not that wrong answer : up to 10%. In Australia: 0% required, but in practice the banks have a little bit. That's all the banks have. In our current Bretton-woods economic systems, banks create (and destroy) money.