Bank of Canada Week 8

Fracional reserve banking was born history of banking

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Unformatted text preview: to be paid from their reserves. This was the birth of the cheque. •  Because these notes were not all redeemed at the same Ime (and returned to the goldsmiths to receive the coins deposited with them), they would then in turn loan out the coins they had on reserve to make interest off of loans. •  FracIonal Reserve Banking was born. History of Banking •  Any deposit you make at a bank is in a sense a loan to that bank that is repayable on demand. •  This is why you earn interest on your bank accounts. •  The bank then takes the money you have deposited and loans it out to others. •  Bank profits are realized on the difference in interest they pay to you for deposiIng your money with them and the amount of interest they charge someone to borrow money from...
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This note was uploaded on 01/26/2014 for the course LAPS ADMS 1010 taught by Professor D.jurkowski during the Winter '10 term at York University.

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