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In virtually all developed nations, the requirement is either zero or single-digit percent.
by gridlockd 7y ago
In virtually all developed nations, the requirement is either zero or single-digit percent.
- benj111 7y agozero? What happens when someone wants to make a withdrawal?
- rtkwe 7y agoThe operative word there is requirement. Banks in 0% reserve countries don't have to keep cash around but do to serve as their actual functions as banks.
- benj111 7y agoWhat countries are we talking about here? As far as I'm aware most developed nations have capital requirements for the banks. Whilst maybe not stating a minimum % reserve, in practice they do need to keep reserves for those capital requirements.
- rtkwe 7y agoI don't know I was just answering your question about deposits.
- stephen_g 7y agoBanks can borrow reserves from other banks or the lender or last resort. They usually do keep some reserves around for liquidity, but as little as possible because reserves don't make as much return just sitting in an exchange settlement account as they do if they lend them to other banks or buy Government bonds with them. Fractional reserve in general isn't really a thing in modern banking. The US still does have a reserve requirement but pretty much the rest of the world relies on capital adequacy ratios (some capital is usually stored as reserves in exchange settlement accounts but it doesn't have to be).
- richardwhiuk 7y agoNo there are strict tier 1 and tier 2 capital ratios that banks are required to uphold.
- gridlockd 7y agoThe fractional reserve requirements for cash and equivalent are in the single digits, as I said: https://en.wikipedia.org/wiki/Reserve_requirement#Required_reserves https://en.wikipedia.org/wiki/Reserve_requirement#Required_r... Tier 1 capital is not cash reserves, it's risk-adjusted assets, which may or may not be made up of assets that are as liquid as cash.