Respuesta :
This claim is untrue. When banks engage in fractional reserve banking, the majority of the funds not deposited remain in the bank's safes.
What impact does fractional reserve banking have on banks?
By using funds (i.e., the majority of deposits) that would otherwise be unused and idle, banks are able to produce returns in the form of interest rates on new loans and increase the amount of money that is available to support economic growth. As a result, it may more effectively allocate capital to areas where it is most required.
Why must banks hold back a portion of their deposits as reserves?
The amount of money that a bank must have in reserve in order to pay its obligations in the event of unforeseen withdrawals is known as the reserve requirement. The central bank uses reserve requirements as a tool to alter the amount of money in the economy and affect interest rates.
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