fractional banking

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fractional banking

a BANKING SYSTEM in which banks maintain a minimum RESERVE ASSET RATIO in order to ensure that they have adequate liquidity to meet customers’ cash demands. See COMMERCIAL BANK.
References in periodicals archive ?
Therefore, when the securities one party can call on demand are used to finance his broker's business, it is akin to the fractional-reserve banking and can explain why there are runs on shadow banks.
The rejection does not come as a surprise, however, because for Simpson fractional-reserve banking is a serious problem for the economy.
Machaj points to an alleged double standard in Block's argument since the latter is a severe critic of fractional-reserve banking.
Fractional-reserve banking combined these two types of banking institutions into one institution--a single institution offering both transaction services and intermediation services.
However, he does not draw the obvious conclusion that a currency board in gold is therefore less efficient than fractional-reserve banking under a gold standard.
To the extent their activity replicates that of fractional-reserve banking, they would need to be brought under the purview of the plan.
25 percent, which paves the way for more money- creation through the fractional-reserve banking system.
In the 90's, after a partial rereading of Father Dempsey's book, I was prompted to learn more about Mises' understanding of the nature of fractional-reserve banking and its contribution to the boom-and-bust cycle.
Economist Jesus Huerta de Soto places the blame on the institution of fractional-reserve banking.
Fractional-reserve banking allows banks to create money by issuing debt backed by nothing but institutional authority, and inevitably distorts interest rates and credit markets by easy-money policies.
To eliminate this element of discretion in the money circuit, fractional-reserve banking should be replaced by 100 percent-reserve banking.
Has Fractional-Reserve Banking Really Passed the Market Test?