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Can you describe the mechanism by which deposits held by a bank are lent to borrowers under the fractional reserve system described in that Wikipedia article?
by dools 4y ago
Can you describe the mechanism by which deposits held by a bank are lent to borrowers under the fractional reserve system described in that Wikipedia article?
- lupire 4y ago"Fractional-reserve banking is the system of banking operating in almost all countries worldwide,[1][2] under which banks that take deposits from the public are required to hold a proportion of their deposit liabilities in liquid assets as a reserve, and are at liberty to lend the remainder to borrowers"
- dools 4y agoYes now it says: “to lend the remainder to borrowers” Can you describe how money that a bank has in deposits is lent out to borrowers?