Principles of Macroeconomics / Unit 11 MAC 1013 short lesson, about 20 seconds
Fractional Reserve Banking
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The idea
A bank holds reserves worth only a fraction of the deposits claimed against them, because depositors do not all withdraw at once. This is fractional reserve banking.
In practice
It works on the arithmetic of averages, not on every claim being met at once.
Where people slip
The same feature makes a run possible: a crisis of confidence, not of assets.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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