If Fractional Reserve Banking does not work because banks do not lend Reserves, doesn’t that mean Central Bank policy, i.e. QE, does not work as advertised?
Fractional Reserve Banking is not what actually happens in the real economy, because banks do not lend Reserves. How then is money created?
Explaining what Fractional Reserve Banking is, and how it works together with the Reserve Requirement Ratio to theoretically multiply money.
What are bank Reserves? Simply put, bank Reserves are how banks settle transactions (bank transfers from one client to another) between each other.