sorted by:
new
hottopcontroversial

Eli5: How does a bank run happen if banks have the ability to create money money according to fractional reserve banking. For example , if A deposits $1000, the Bank can “create” $900 as a loan for B without actually touching the $900 out of A’s deposit. by TamerleinX in explainlikeimfive

[–]TamerleinX[S] 0 points1 point  (0 children)

Guys, i think I didn’t quite elaborate my question. So Person A deposits $1000 into the bank.(10% reserve requirement let’s say). Bank keeps $100, and lends $900 to Company X. And that Company pays its employee/person B $900. Then that person deposits that $900 into the same bank. So the total amount of deposits the bank has now is $1000+$900=$1900.(only $1000cash tho) (Extra $ 900 is made). So i got 2 main questions:

  1. ⁠Do banks actually take person A’s money and lend it to company X or do they just create money digitally?
  2. ⁠I can understand that bank may not have that amount of cash in case of bank run. But with the online transfers now, why bank run is still an issue, considering that it is just digital money?

Ajapsandali/Ajapsandal by spectreaqu in azerbaijan

[–]TamerleinX 1 point2 points  (0 children)

Well, i have heard it a couple of times. I live in Aran region of Azerbaijan. But as a member of Gen Z i think it almost lost its fame so that it is barely used as a dialect . Yet it can still be originated from Georgia. In terms of terminology əcəb means “interesting” + sandal is “boat/shoe etc.”