Banks have checking accounts with national or central bank and only keep enough money {reserves, bank}| {bank reserves} to meet expected demand from checking-account customers, because it is unlikely that all people will demand their money at once. By law, reserves must be a percentage, typically 25%, of bank demand deposits. When bank receives checking-account deposits, it places some money in reserves and has the rest available to make loans.
Social Sciences>Economics>Microeconomics>Banking
6-Economics-Microeconomics-Banking
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Date Modified: 2022.0224