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Money is created, just not the entire loan.
by ddingus 8y ago
Money is created, just not the entire loan.
- AnthonyMouse 8y agoThe amount of money created is the entire loan amount. The full deposit still exists in addition to the loan. What the reserve ratio does is create an upper bound on how much new money the bank can create (before it needs more reserves).
- ddingus 8y agoI didn't know that. Do you have a reference? (I believe you, just want to learn more.) NVM, I was confused over another statistic. ~97 percent of all new money is created in local banks, the government only creating ~3 percent.