Jump to content

File:Fractional-reserve banking with varying reserve requirements.gif

Page contents not supported in other languages.
This is a file from the Wikimedia Commons
From Wikipedia, the free encyclopedia

Fractional-reserve_banking_with_varying_reserve_requirements.gif (631 × 429 pixels, file size: 19 KB, MIME type: image/gif)

Summary

Description
English: The expansion of $100 through fractional-reserve banking with varying reserve requirements. Created with openoffice.org Calc. Data obtained by using information from the Federal Reserve Bank of New York which explains how the process of fractional-reserve banking creates new money. See the description of the process on this page: http://www.newyorkfed.org/aboutthefed/fedpoint/fed45.html

It says:

Reserve requirements affect the potential of the banking system to create transaction deposits. If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000). In contrast, with a 20% reserve requirement, the banking system would be able to expand the initial $100 deposit into a maximum of $500 ($100+$80+$64+$51.20+...=$500). Thus, higher reserve requirements should result in reduced money creation and, in turn, in reduced economic activity.
Date
Source Own work
Author Analoguni

Licensing

Public domain I, the copyright holder of this work, release this work into the public domain. This applies worldwide.
In some countries this may not be legally possible; if so:
I grant anyone the right to use this work for any purpose, without any conditions, unless such conditions are required by law.

Captions

Add a one-line explanation of what this file represents

Items portrayed in this file

depicts

August 2008

File history

Click on a date/time to view the file as it appeared at that time.

Date/TimeThumbnailDimensionsUserComment
current03:03, 7 August 2008Thumbnail for version as of 03:03, 7 August 2008631 × 429 (19 KB)Analoguni~commonswiki{{Information |Description={{en|1=The expansion of $100 through fractional-reserve banking with varying reserve requirements. Data obtained by using information from the Federal Reserve Bank of New York which explains how the process of fractional-reserv

The following page uses this file:

Global file usage

The following other wikis use this file: