Overview

fractional reserve banking


'fractional reserve banking' can also refer to...

 

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A banking system in which banks hold minimum reserves of cash or highly liquid assets equal to a fixed percentage of their deposit liabilities. The minimum percentage of reserves may be adopted voluntarily as a matter of commercial prudence, or required by law or convention. In either case the intention of minimum reserve requirements is to safeguard the ability of banks to meet their obligations.

Subjects: Economics.


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