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| Can the banks create as much
money as they like? The saver's bank has not lent out the whole
20,000 francs but has kept 4,000 francs as a reserve. For it
must expect that the saver will want to withdraw a certain amount
from his account. Having to hold such sums as reserves does
set a certain limit on the banks' ability to create money. Nevertheless,
the banks are real "money multipliers". |
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