Under the modern system of fractional reserve banking, banks

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Under fractional reserve banking, banks are only required to keep a fraction of their deposit liabilities in cash reserves. Banks make money by loaning out the excess reserves at interest, which is the key to their profitability. However, this system also makes banks potentially vulnerable to runs, as depositors may demand their funds back in large amounts all at once, causing the bank to become insolvent if they do not have enough cash reserves on hand.

Under the Modern System of Fractional Reserve Banking, Banks