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But that’s not how banks work. They don’t lend out the capital of depositors. Rather, when they lend money, they record a receivable from the borrower, and at
by legutierr 4y ago
But that’s not how banks work. They don’t lend out the capital of depositors. Rather, when they lend money, they record a receivable from the borrower, and at the same time credit the borrower’s account at the bank. Bank lending creates money.
- lupire 4y agoYes, things are mostly virtualized, but if what you say were true than then it would be impossible for a bank run to collapse a bank. Money in your account a debt the bank owes you. It's not money you can spend until after you withdraw it and the bank has liquidity to honor the withdrawal. https://en.m.wikipedia.org/wiki/Fractional-reserve_banking https://en.m.wikipedia.org/wiki/Fractional-reserve_banking