Question

Should banks have to hold 100% of their deposits? Why or why not?

Short answer

The holding of$100\%$ of deposits by the banks is not allowed anywhere.

Step-by-step solution

:Concept Introduction

The quantum of plutocrat the banking system creates through the plutocrat multiplier is the quantum of reserves the bank holds. Banks don't hold$100\%$of their deposits.

:Explanation of Solution

The reason behind banks not holding its $100\%$of their deposits is to make a profit by using these deposits to lend loans that earn interest, instead of holding money as a deposit that earns nothing. Due to this reason, the holding of $100\%$of deposits by the banks is not allowed anywhere