Well, obviously if you were starting a bank, you'd want a pile of reserves and cash so that this doesn't happen to you on day one. Alternately, you'd offer to h

Well, obviously if you were starting a bank, you'd want a pile of reserves and cash so that this doesn't happen to you on day one. Alternately, you'd offer to hold deposits for some people in exchange for interest, and then lend it out. Your reserve ratio might be close to 100% in this case But over time, as your reputation got better and you gathered more deposits, you would lend out far more than your reserves. You could do this as much as your risk tolerance allowed. Historically, the Fed had a minimum reserve requirement of around 10%, meaning banks needed to have only 10% of the value of their deposits in safe, liquid assets. As of 2020, that requirement was dropped to... 0%