4 ms·

Well as I see it there are only really two possibilities: full reserve or fractional reserve, and I've never really seen full reserve banking (i.e. demand depos

• Frozenlock 11y ago
  I don't. With a full reserve, demand deposits shouldn't be lent, but term deposits can be. With this, you maintain a full reserve and continue to have lenders/borrowers.
  • dragonwriter 11y ago
    Lending term deposits cannot provide a guarantee of full reserve, because term deposits mature and you cannot absolutely guarantee that you will have reserves on hand to meet them when they mature. You can have "full reserve" of demand (including matured term) deposits as a goal and lend out term deposits, but you get at best a statistical probability approaching -- but never equaling -- unity of maintaining full reserve based on past repayment and new deposit patterns.
    • Frozenlock 11y ago
      And? Demand deposits are still 100% whole.