Difference between revisions of "Full Reserve Banking"
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| − | A [[Full Reserve Banking]] or 100% reserve banking system is one in which banks must hold reserves for 100% of on-demand liabilities. This means that should on-demand creditors all simultaneously ask for repayment, the bank will be able to honor all its obligations. | + | A [[Full Reserve Banking]] or 100% reserve banking system is one in which banks must hold reserves for 100% of on-demand liabilities. This means that should on-demand creditors all simultaneously ask for repayment, the bank will be able to honor all its obligations. This contrasts with a system of [[Fractional Reserve Banking]]. |
Revision as of 17:24, 26 December 2015
A Full Reserve Banking or 100% reserve banking system is one in which banks must hold reserves for 100% of on-demand liabilities. This means that should on-demand creditors all simultaneously ask for repayment, the bank will be able to honor all its obligations. This contrasts with a system of Fractional Reserve Banking.
