> We don’t have fractional reserve in the USA, the UK, Aus etc and haven’t had for a number of years at this point.
What do you mean by that?
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
EDIT hmm that doesn’t link directly to the relevant FAQ:
“Why did the Federal Reserve reduce reserve requirement ratios to zero percent?
For many years, reserve requirements played a central role in the implementation of monetary policy by creating a stable demand for reserves. In January 2019, the FOMC announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a significant role in this operating framework.
As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent, effective March 26, 2020, in light of the shift to an ample reserves regime. This action eliminates the need for thousands of depository institutions to maintain balances in accounts at Reserve Banks to satisfy reserve requirements, thereby freeing up liquidity in the banking system to support lending to households and businesses.”
You still have fractional reserve banking, even with zero mandatory reserve requirements.
Btw, banks still keep plenty of reserves around. See https://fred.stlouisfed.org/series/TOTRESNS for the US.
Not GP, but there are two senses in which I think it could be meant:
- Currency no longer has to be backed by some fraction of shiny objects,
- Banks do not need to arrange CB reserves before making loans -- they make loans and then secure the needed CB reserves.
That's still all fractional reserve banking.
Btw, in the US there's lots and lots of bank reserves: https://fred.stlouisfed.org/series/TOTRESNS