Understanding the Fractional Reserve Banking System

Categories : Digital Money and payments, Technology and Operational Enablers


Author: Cleo Turner

When you put your money into a savings account or a checking account at a bank, the bank doesn’t just sock it away in a vault underground somewhere. Instead, it lends your money to other individuals and companies who need it. Thanks to the magic of fractional banking, when your banks lends your money to other people, it is actually creating money. Learn more here about fractional banking.