4 ms·
"but I'm wondering if it's possible to put a soft lock (like a semi-fixed-deposit) on portion of a customers deposits and use that to finance lending" Fraction
by jganetsk 8y ago
"but I'm wondering if it's possible to put a soft lock (like a semi-fixed-deposit) on portion of a customers deposits and use that to finance lending"
Fractional reserve banking? https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking
Aka, the way things already work.
- spiralx 8y agoNo, because bank lending is not dependent on customer deposits or bank reserves - lending occurs first, then reserve requirements are met afterwards. See for instance this research paper from Standard & Poor's: Repeat After Me: Banks Cannot And Do Not "Lend Out" Reserves https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_...