When you create an account at a bank, in the contract, you agree to allow that bank to use a percentage of your deposits as loans to other bank customers. This doesn't mean you don't h… See more

The fractional reserve banking process creates moneythat is inserted into the economy. When you deposit that $2,000, your bank might lend 90% of it to other customers, … See more

Fractional reserve banking supposedly has its roots in an era when gold and silver were traded. Goldsmiths would issue promissory notes, which were later used as a means of … See more

Most countries today use fractional reserve banking because it is not feasible to use 100% reserve banking. Moreover, a system that requires banks to hold 100% of deposits ca… See more

Pro Explained
1. Banks don't need to hold vast amounts of capital: Because banks use deposits customers tend to leave in their accounts, fractional re… See more