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Not sure how it will work when the person borrowing is different from the one who made the original 100k deposit. I mean, the the person who has borrowed 90K is
by qsera 1y ago
Not sure how it will work when the person borrowing is different from the one who made the original 100k deposit. I mean, the the person who has borrowed 90K is in no obligation to repay the loan when the first person wants to withdraw their 100K deposit.
- MikeNotThePope 1y agoI didn't want to get into fractional reserve banking & reserve requirements, I just wanted to share what I learned about money creation. But to answer your question... it's called a bank run! When a bank (in the USA) doesn't have enough money to cover withdrawals, the bank fails & the government shuts it down. You can read up on a recent example with Silicon Valley Bank: https://www.law.uw.edu/news-events/news/2023/svb-collapse https://www.law.uw.edu/news-events/news/2023/svb-collapse