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The banking system of the United States is a fractional reserve system. What dangers does this...

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Economics

The banking system of the United States is a fractional reservesystem. What dangers does this pose for the safety of the bankingsystem?

can you answer this in a well explained paragraph thank you.

Answer & Explanation Solved by verified expert
3.7 Ratings (391 Votes)
The new banking system called fractional reserve banking is built on the premise that it is very unlikely that people would need all their deposits back at once One example of this is someone who deposits 100 into a bank Assuming the bank has a 25 per cent reserve ratio although it will be much lower in reality    See Answer
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