I went to my bank to get some money to by my new car the other day. I needed $4000. They told me that officially I needed to give 24 hours notice for cash withdrawl over $2,000 however they had enough today so they could give me my $4000. Now my bank is probably a bit smaller than ANZ but I found this quite startling. It got me wondering about how much money banks have in reserve.
A note about Reserve banking . Banks don't need $100 dollars to lend you $100.The US has a requirement that the banks have to at least own equity worth 10% of the total loans outstanding. So if Citibank only actually owned $10 then the sum of all the loans they could make could not exceed $100.
So I did a little investigation and what I found (with a quick look on wikipedia) concearned me somewhat. I knew that the US had a 10% requirement I didn’t know though that the UK and Australia does not require any reserve requirement whatsoever. So they can make money loaning money they don’t have. I wish I could do that.
Country |
Required reserve (in %) |
Note |
|---|---|---|
Australia |
None
|
Statutory Reserve Deposits abolished in 1988,
replaced with 1% Non-callable Deposits[5] |
Canada |
None
|
|
Mexico |
None
|
|
New Zealand |
None
|
1999 [2] |
Sweden |
None
|
|
United Kingdom |
None
|
|
Czech Republic |
2.00
|
Since 7 October 2009
|
Eurozone |
2.00
|
Since 1999[6] |
South Africa |
2.50
|
|
Switzerland |
2.50
|
|
Poland |
3.00
|
|
Chile |
4.50
|
|
India |
6.00
|
as per RBI. |
Bangladesh |
5.50
|
Raised from 5.00. Effective from 15 May 2010
|
Lithuania |
6.00
|
|
Pakistan |
5.00
|
Since 1 November 2008
|
Taiwan |
7.00
|
[7] |
Latvia |
8.00
|
|
Jordan |
8.00
|
|
Malawi |
15.00
|
|
Zambia |
8.00
|
|
Burundi |
8.50
|
|
Hungary |
2.0
|
|
Ghana |
9.00
|
|
United States |
10.00
|
