A system in which banks hold reserves whose value is less than the sum of claims on those reserves is called
A) speculative banking.
B) leveraged banking.
C) fractional reserve banking.
D) international banking.

Question

Quizplus · Accepted Answer

A system in which banks hold reserves whose value is less than the sum of claims on those reserves is called fractional reserve banking. This is the system that is currently used in most countries and allows banks to create money through the process of lending.

A System in Which Banks Hold Reserves Whose Value Is