They have a 10% reserve requirement in the US. So, if they get 10 dollars deposited, they can loan $100. Whether they get it from the feds or wherever varies and this guys explanation is slightly simplified, but as a general rule $10 of cash is $100 of working money for the bank.
They did away with 10% reserve requirements back when Covid started. Depending on the depositor account it could be 1% or 0%. That includes your checking account, by the way.
It's called fractional reserve banking and lending. The banks, from the Fed down, can loan out 9 or 10 times (can't remember the exact number) of money than they actually have. The banks can then earn interest on that fake money.
Is that first part true, that they get ten times from the Federal Window?
They have a 10% reserve requirement in the US. So, if they get 10 dollars deposited, they can loan $100. Whether they get it from the feds or wherever varies and this guys explanation is slightly simplified, but as a general rule $10 of cash is $100 of working money for the bank.
No, of course it's not true. u/ApexVeritas & u/ccpneveragain are BOTH wrong.
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They did away with 10% reserve requirements back when Covid started. Depending on the depositor account it could be 1% or 0%. That includes your checking account, by the way.
It's called fractional reserve banking and lending. The banks, from the Fed down, can loan out 9 or 10 times (can't remember the exact number) of money than they actually have. The banks can then earn interest on that fake money.
Yes, it's true.