Question #213

In a 100-percent reserve banking system, some depositors may agree to fixed-term deposits to allow the bank to lend their money for the duration of the term. While this would allow for some credit creation the system would not face the same risks that burden the "fractional reserve deposit" system because the banking system would always be able to pay depositors on demand (or when the fixed-terms expired).

Answer #1527

Answer: False

Explanation

Please see 100-percent reserve banking and state banks for more information or post a comment.