A fractional reserve banking system is one in which banks hold less than 100 percent of ________ as reserves.

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In a fractional reserve banking system, banks hold less than 100 percent of deposits as reserves. This means that they are able to lend out a portion of the deposits they receive and only need to hold a fraction of the amount as reserves to meet withdrawal demands from customers. This system allows for more lending and economic growth, but also increases the risk of bank runs and financial instability.

A Fractional Reserve Banking System Is One in Which Banks