The reserve requirement ratio does not do what you think it does. It is the amount of money that the bank is required to keep in its account at a Federal Reserv

The reserve requirement ratio does not do what you think it does. It is the amount of money that the bank is required to keep in its account at a Federal Reserve Bank as a ratio of deposits. Note that literal cash sitting in a vault does not count one iota towards satisfying this reserve ratio. Bank regulations have moved one from having such a specific requirement. Nowadays, you essentially need a minimum amount of equity per risk-weighted assets. So you need something like $8 in cash for every $100 in loans you give out.