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. A tabe showing the reserve requirements by country can be found here wikipedia.