Most modern banking systems are based on
A) money of intrinsic value.
B) commodity money.
C) 100 percent reserves.
D) fractional reserves.

Question

Quizplus · Accepted Answer

Most modern banking systems are based on fractional reserves, which means that banks are only required to hold a fraction of their customers' deposits as reserves and can use the rest to make loans and earn profits. This system allows for more flexibility in the money supply and can stimulate economic growth, but also carries the risk of bank runs and financial instability. Money of intrinsic value and commodity money are not typically used in modern banking systems, and 100 percent reserves are rare due to their restrictive nature.

Most Modern Banking Systems Are Based on