A system in which depository institutions hold reserves that are less than the amount of total deposits is called

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Fractional reserve banking is a system in which banks keep reserves that are only a fraction of the total deposits they hold. This allows them to lend out the rest of the deposits and earn interest on those loans, which is their primary source of revenue. This system is used in most countries around the world, including the United States.

A System in Which Depository Institutions Hold Reserves That Are