#Banks adopted #fractionalReserve banking to maximize profits and attract more customers. By offering minimal fees or even yield incentives, banks encourage more deposits, leading to increased lending and customer base.

However, this practice expands the money supply beyond the reserves held by the bank, creating the potential for bank runs if depositors demand more funds than the bank can cover.

This cycle of attracting deposits, lending, and expanding the money supply can be profitable for banks in the short term but carries inherent risks, including liquidity shortages and systemic instability, as witnessed in historical banking crises.

#brokenMoney nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a