4 ms·
I was under that impression they could make loans of 72/8 of their account balances. I may very well have misunderstood, but I had thought banks could loan out
by sopooneo 13y ago
I was under that impression they could make loans of 72/8 of their account balances. I may very well have misunderstood, but I had thought banks could loan out a given dollar multiple times at once. No?
- stormbrew 13y agoNo. The reason there's a multiplier effect that gets talked about a lot is because the money you borrow from the bank then ends up in another bank account (of the person you were borrowing money to pay). The bank it's deposited in there can then lend out against that deposit. But each bank loan is balanced, to the reserve ratio that bank operates at, to a corresponding deposit.