What kind of reserve system do modern banks use?

Question

Quizplus · Accepted Answer

Modern banks use a fractional reserve system, in which they are required to keep only a portion of their deposits as reserves and can lend out the rest. This allows banks to create money through lending and is the basis of the modern banking system. A 100-percent reserve system would require banks to hold all deposits as reserves, limiting their ability to lend and create money. A gold standard system would require currency to be backed by gold, which is no longer the case in modern economies. A partial reserve system is not a commonly used term in describing banking systems.

What Kind of Reserve System Do Modern Banks Use