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It's worth checking out the link I provided to the Bank of England's document on modern banking and "loans make deposits", as opposed to your outdated view that
by psychphysic 4y ago
It's worth checking out the link I provided to the Bank of England's document on modern banking and "loans make deposits", as opposed to your outdated view that "deposits make loans".
Fractional reserve banking is not how modern banking works. Banks must maintain a liquidity but otherwise the loans are money they made up, they simply tell the central bank they made a loan.
- missedthecue 4y agoMoney is fungible. Functionally, the result is the same. A bank cannot lend out more than the amount of assets (deposits) that it has on the books.
- psychphysic 4y agoThat's categorically untrue. But understanding why would require reading the article I linked earlier.