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<p>[QUOTE=&quot;fatima, post: 1313274, member: 22143&quot;]<i>&quot;.... but the correction was that they have 100% of the funds and loan out 900% of what they have....&quot;</i></p><p><br /></p><p>Yes, he is correct.&nbsp;&nbsp; If the reserve requirement is 10% then the bank loans out 9X what it has in deposits.&nbsp; If the requirement is 20% the bank will loan out 4X.</p><p><br /></p><p><br /></p><p>Edit:&nbsp; In thinking about this a little more, I&#039;m not sure which definition is correct, however the end result is the same.&nbsp; i.e.&nbsp; In both cases the bank is only holding 10% of the money in reserve that it has lent out.&nbsp;&nbsp; I tend to believe that Guano is wrong.[/QUOTE]</p><p><br /></p>

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