Under a fractional reserve banking system

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Under a fractional reserve banking system, banks are only required to keep a fraction of their deposits on reserve, meaning that their total deposits (liabilities) exceed their total reserves. This allows banks to lend out more money than they actually have on hand, which can increase the money supply and stimulate economic growth. However, it also means that banks are vulnerable to runs and other forms of systemic risk, since they may not have enough cash on hand to meet all of their depositors' withdrawal requests at once.

Under a Fractional Reserve Banking System