Fractional-reserve banking

From CNM Wiki
Jump to: navigation, search

Fractional-reserve banking is a system in which banks keep only some of their deposits on reserve. (Cf. 100-percent-reserve banking.)

Definition

According to Macroeconomics by Mankiw (7th edition),

Fractional-reserve banking. A system in which banks keep only some of their deposits on reserve. (Cf. 100-percent-reserve banking.)