Banking 9: More on Reserve Ratios (Bad sound)

Seeing how reserve ratios limit how much lending I can do.

Category:

Education

Tags:

• banking
• reserve
• ratio
• lending

[pjblabla]

You have done an excellent job in diffrentiating solvency from liquidity

that's the problem in the current financial crisis - people thought banks were not liquid - however, the problem was much graver - most banks were not solvent

[DUCATI1098100]

Two thumbs up!!! Very educational...Thanks for posting. Surprise so few have seen this...no wonder education is dropping in this country.

[Wisdomhunting]

Hi everyone, I do not really get how Reserve requirements work. It is 10 per cent is it meant that I need to keep 10 percent of the total liabilities which is 300GP? but, this would only work in the case where we are sure that the person would not withdrawn all money right away, am I right?

Because if loan borrowed are to be withdrawn right away, which is gold in this case. The bank would not have enough gold to pay the person. even if it kept the within the 10per cent. 

[MrPEDOCTOR]

Its really bad sound,. lol 

[Pettenderk]

It always confused me, the phrase explaining 'liquid': 'If someone asks for their gold, the bank is able to give it to them.' Better would be: 'A bank is 'liquid' as long as its Reserve is EVEN or HIGHER to the Reserve Ratio Requirement.'

[joeshmoeb]

Hi, in this example, if the loans are good and are paid back over time, what does the bank get? The band does not get more "gold pieces" because it only opened a checking account as the reserve requirement allowed right? How does the bank actually increase its gold reserve to increase its loan making in the future?

[r2sj]

Good job Sal! Very useful for the current financial situation around the world.

[ChulaKirby]

loans? at the same time they are getting deposits? I guess what I am asking is this......Is it an assumption that the new holder of the check or bank notes is actually re depositing their funds in my bank?

[ChulaKirby]

I dont quite understand. I can see if someone deposited their money and I created a demand deposit for them, they are not going to come back tomorrow and want all of it back. So 10% reserve would be okay. But if I made a loan and then a demand deposit for them, the odds that they would write a check for the whole amount is almost guaranteed. And then the new check holder's bank would want that whole amount and 10% reserve wouldnt be enough. In reality are they just making a bunch of little

[LimeZYX]

how can you lend out checking accounts representing 2900 gold pieces when you only have 300 gold pieces in actuality? thanks for the vids, btw.

[PredominateOne]

@Luigi84289 \/ \/ \/

[PredominateOne]

Natives had it right you can't own land, everybody shares it. We need freedom like in the venus project.