What does "Fractional Reserve Banking" mean?

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What does "Fractional Reserve Banking" mean?

2007-01-31 07:50:23 · 2 answers · asked by Matthew. 4 in Business & Finance ➔ Other - Business & Finance

2 answers

Fractional reserve banking is the practice that allows all banks under the Federal Reserve system to operate on a fraction of the depositors' assets. http://www.patriotmoney.com/faq.html

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2007-01-31 07:58:05 · answer #1 · answered by Anonymous · 0⤊ 0⤋

Only a portion (fraction) of what a bank has on deposits is required to be maintained without loaning it out.

2007-01-31 07:53:20 · answer #2 · answered by Anonymous · 0⤊ 0⤋