Down, of course, down. And what? Is the reserve ratio of the bank.


The deposit reserve refers to the deposit that the financial institution prepares to guarantee the customer's withdrawal of deposit and capital settlement needs, and it is the deposit reserve ratio required by the central bank to the total deposit.

Simply put, people deposit their money in the bank. The bank only needs to leave a small amount of money for working capital to maintain the bank's daily business, while the other part of money can be used to invest or lend to others to create more wealth. The small part of the money is the deposit reserve, and the ratio of the bank reserve to all existing funds is the deposit reserve ratio.

We know that only the central bank has the right to issue money, and adjusting the reserve ratio is also a means used by the central bank to regulate the national economy. In addition to other banks of the central bank, when lending to debtors, reserves need to be deposited into the central bank on a pro rata basis for the central bank to see and manage.

If, deposit reserve ratio is 20%, a person deposits 100 yuan in the bank, the bank needs to deposit 20 yuan in the central bank, and the remaining 80 yuan can be used to lend to another person, when this 80 yuan is deposited in the bank again because of some circumstances, the bank will deposit 20% of 80 yuan again, that is, 16 yuan in the central bank, and the remaining 64 yuan can continue to lend

When the money is repeatedly borrowed by the bank, the bank's deposits will become more. Ideally, 100 yuan will become 500 yuan, which is the broad money (M2).

Drop the deposit reserve ratio by a few percentage points. For a matter of 100 yuan or a few cents, if it's in the order of trillions, it's a matter of hundreds of billions. It's more exciting than pie in the sky!!!