Reserves are one (largely unimportant) brake on lending. Many western central banks have never had a reserve requirement. The more important limits to lending

Reserves are one (largely unimportant) brake on lending. Many western central banks have never had a reserve requirement. The more important limits to lending are regulatory capital controls which measure both the asset to liabilities mix but also the credit and interest rate risk of the asset mix and loan to deposit ratio. The latter is a commonly tracked metric by bank investors and they typically view a ratio of higher than 0.8 with suspicion (down from 0.9 post 2008). The US banking industry ratio is about .63 right now which is up from a pandemic low of .57 but still down from the pre-pandemic ratio of .75. That banks were not lending enough was the reason the fed removed the reserve requirement.