If the reserve ratio is 20% and a money creation increases banking system reserves through $10 million, the massive shift in the supply of money after all cycles of bank loans is $50 million.
What exactly do users mean by banking?
Banking is the biz of safeguarding other people's money. Banks can lend this money, earning interest and profit for both the customer and the bank. A bank is a type of financial institution that is permitted to admit deposits and lend money.
Which are the two primary kinds of banking?
Commercial banks, such as Bank of America, fall under the banking and finance umbrella, as do central banks, which are government entities that oversee the industry and handle monetary policy.
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