Fractional reserve banking refers to a banking system in which

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Fractional reserve banking means that banks hold only a fraction of the total deposits as reserves (i.e., cash and deposits with the central bank) and lend out the rest. For example, if a bank has $100 in deposits, it may hold $10 in reserve and lend out the remaining $90. This system allows banks to create money through lending, but it also exposes them to the risk of a bank run if too many depositors try to withdraw their money at once.

Fractional Reserve Banking Refers to a Banking System in Which