reserve ratio Archives

$fractional reserve banking, reserve requirements, Austrian economics, business cycle theory, Federal Reserve$

In the first of this series of posts, I explained that the mere presence of fractional-reserve banks itself has little bearing on an economy's rate of money growth, which mainly depends on the growth rate of its stock of basic (commodity or fiat) money. The one exception…

excess reserves, liquidity coverage ratio, required reserves, reserve ratio, reserve-deposit ratio

Economic Thought, Free Banking, Monetary Policy Primer, The Fed & Central Banks

A Monetary Policy Primer, Part 6: The Reserve-Deposit Multiplier

George Selgin/July 12, 2016June 19, 2022

In my last post in this series, I observed that an economy's "base" money serves as the "raw material" that commercial banks and other private-market financial intermediaries employ in "producing" deposits of various kinds that can themselves serve as means of exchange. If they could do so…