Obviously.. why would any one hold fiat .. they always hold interest bearing assets .. either private loans or TBills ..
Discussion
Bank reserves bear interest now too, through IOR at the Fed. they use it as part of their toolbox in regulating the Fed Funds rate, alongside open market operations.
You just asked what’s Fractional Reserve and now you’re putting on an economics lecture. What’s the question? 😂
But "not holding 100 percent in liquid cash"
.. is not what fractional reserve system means ..
That is my point ..
You’re saying what people think fractional reserve banking means isn’t really what it means?
Yes .. I think there was a video ..that started this myth that banks are lending 100 percent of what we deposit ( which is true) ..and then repeat ..thus creating money out of thin air .. and it was named Fractional Reserve banking ..
Totally unconnected ..
Sometimes incorrectly assigned terms just stick and become widely accepted.
We need easy short hand to fit a definition. 🤷♂️