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"which are now flushed with excess cash that they can use to lend and profit from" That isn't true. In fact holding the cash in the USA prevents banks from doi
by neilwilson 4y ago
"which are now flushed with excess cash that they can use to lend and profit from"
That isn't true. In fact holding the cash in the USA prevents banks from doing lending due to the liquidity ratio requirements. Other nations don't include cash in that ratio. The US does.
Banks never lend money on. They just create it.
See https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
- yosefjaved1 4y agoWould you further explain what you mean by it not being true? I don't understand how banks not lending the money isn't considered cash creation. I know that US banks have reserve requirements, but that doesn't mean they don't lend any money out.