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Citation ?

• badpun 7y ago
  Banking laws and regulations. In most countries, banks are required to physically hold (i.e. not lend further) as a reserve a fraction of the money in their customers accounts. This is to provide liquidity, protect against bank runs etc. So, If a customer A has $1000 in his account and the reserve rate is 10%, the bank can only lent $900 to some other person B. Then, in turn only 90% of that can be lent further. If you run this to the limit, for a 10% reserve rate, the amount of money that can be generated by banks is at most 10x the physical amount.
• dlp211 7y ago
  https://www.google.com/search?q=bank+deposit+reserves&oq=bank+deposit+reserves&aqs=chrome..69i57j0l3.8204j1j7&sourceid=chrome-mobile&ie=UTF-8 https://www.google.com/search?q=bank+deposit+reserves&oq=ban... Currently 10% of deposits for big banks, ie more than $124MM in deposits.