Which of the following is true for U.S.banks?

Question

Quizplus · Accepted Answer

U.S. banks are required to keep only a fraction of total deposits as reserves, which is known as the reserve requirement. This allows banks to lend out the remaining funds, effectively creating new money through the process of lending. However, this lending is limited by the bank's capital and liquidity requirements imposed by regulatory authorities. Banks do not print money, and are not allowed to lend as much money as they choose without regulatory constraints. The statement about transferring money from spenders to savers is not a unique characteristic of U.S. banks.

Which of the Following Is True for U.S.banks