Row 54987

Row ID: 54987 | Dataset Entry | Axioma AXP Content Repository

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This page contains data entry 54987 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

"Reserves" have not meant "minimum funds banks are to retain, while lending the rest out" in a *very* long time.

Banks *are not* and *have not been* using a fractional reserve system for close to a century *if not more* (that goes for either central bank issued "reserves" or prudentially retained "reserves").

When banks lend, they *create* deposits.

From a 2014 report from the [Bank of England - PDF](https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf)

>In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. **Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.** *The reality of how money is created today differs from the description found in some economics textbooks:* **Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.** *In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.*

There goes the money multiplier. In reality, banks *do not loan out other people's money*. Even when there were reserve requirements after the late 1800's, they largely fulfilled a clearing and/or regulatory function and were not a prerequisite for bank lending (hence reserve requirements being 0 in many jurisdictions). There are no reserves being fractioned. Banks *create* deposits by lending, they do not get them from "elsewhere".

>How would that work with bitcoin?

It doesn't, not fulsomely.

FieldValue
text "Reserves" have not meant "minimum funds banks are to retain, while lending the rest out" in a *very* long time. Banks *are not* and *have not been* using a fractional reserve system for close to a century *if not more* (that goes for either central bank issued "reserves" or prudentially retained "reserves"). When banks lend, they *create* deposits. From a 2014 report from the [Bank of England - PDF](https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-…
label r/bitcoin
dataType comment
communityName r/Bitcoin
datetime 2024-05-23
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Raw Record

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  "text": "\"Reserves\" have not meant \"minimum funds banks are to retain, while lending the rest out\" in a *very* long time. \n\nBanks *are not* and *have not been* using a fractional reserve system for close to a century *if not more* (that goes for either central bank issued \"reserves\" or prudentially retained \"reserves\").\n\nWhen banks lend, they *create* deposits.\n\nFrom a 2014 report from the [Bank of England - PDF](https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf)\n\n>In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. **Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.** *The reality of how money is created today differs from the description found in some economics textbooks:* **Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.** *In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.*\n\nThere goes the money multiplier. In reality, banks *do not loan out other people's money*. Even when there were reserve requirements after the late 1800's, they largely fulfilled a clearing and/or regulatory function and were not a prerequisite for bank lending (hence reserve requirements being 0 in many jurisdictions). There are no reserves being fractioned. Banks *create* deposits by lending, they do not get them from \"elsewhere\".\n\n>How would that work with bitcoin?\n\nIt doesn't, not fulsomely.",
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  "dataType": "comment",
  "communityName": "r/Bitcoin",
  "datetime": "2024-05-23",
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