What is Fractional Reserve Banking?
Posted on September 12th, 2007 by johnb
When you put your money into a bank, How is it used, what do banks do with it? What can they do with it? Thanks to the magic of Fractional Reserve Banking the answer is…almost anything that they want. What exactly is Fractional Reserve Banking? Well, the short answer is keeping only a fraction of the money on hand that they take in, the remainder is lent out. Thanks to the power of borrowing, sweeping and other financial techniques however Tractional Reserves get interesting very quickly.
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