Problem 19

Introduction

A bank is a type of financial institution that accepts deposits from the public, makes demand deposits, and lends money. The bank could use financial markets to carry out loan operations, either explicitly or implicitly. Banks are heavily controlled in most regimes due to their critical role in financial security and the economy. A system known as fractional reserve banking has been established in most nations, in which banks keep liquid assets equal to a percentage of their current liabilities.