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In a non-fractional reserve system the banks would compete for deposits so they can earn money from loaning that back out. In a fractional reserve system where
by phpisthebest 4y ago
In a non-fractional reserve system the banks would compete for deposits so they can earn money from loaning that back out.
In a fractional reserve system where by the Fed allows them to "create" money from thin air that is not needed so they charge to take the deposits
- RC_ITR 4y ago>In a non-fractional reserve system the banks would compete for deposits so they can earn money from loaning that back out. I understand these words but not how you’re putting them together. If banks are lending deposits, then definitionally, they only have a fraction of those deposits left as reserves. What am I missing about your hypothetical? What does this non-fractional reserve system look like if lending still exists?