Fractional Reserve Banking

Fractional Reserve Banking is a banking system through which only a small fraction of bank tissue are backed by actual cash-on-hand and are for sale for withdrawal. This is carried out to expand the actual economy by liberating up capital that may be loaned out for you to other parties. Most countries operate under this type of system. Fractional reserve banking could be the practice whereby a new bank accepts tissue, and holds reserves that are a fraction of how much its deposit financial obligations and liabilities.