Binary Reserve System eFoods Global Review

An original deposit will enable the banking sector to increase deposits to a maximum amount of Binary Reserve System  divided by the reserve requirement of through loan creation. money creation). Let us illustrate how this is done. Say that Mr X found which he decided to deposit into a bank account. For simplicity, let us assume there is only one bank in the economy (alternatively you may think of all banks being consolidated or merged into a single entity). A T-account balance sheet entry of the bank would appear as below:

The cash account (reserve) is debited while Mr X's deposit account is credited with RM1,000. The cash reserve now is 100 per cent of the deposit. However, since the bank is required to keep only 10 per cent as reserves, the bank creates additional deposits until the reserve is 10 per cent of total deposits. How can additional deposits be created? By means of giving loans! The balance sheet position after money creation (assuming maximum money creation) [2]3 would be as follows:

Notice that for the original RM1,000 deposit, an additional RM9,000 deposit is created by means of loans [3]. After money creation, the original RM1,000 deposit is now equivalent to 10 per cent http://quantumvisionsystemreview.com/binary-reserve-system-review/ of the current total deposits of RM10,000, i.e. the required reserve ratio. This increase in money through multiple deposit creation is a one-time increase in the 'money base'. The formula for multiple deposit creation may be written as follows