Fractional Reserve Banking

Aug 10, 2023
3 min read

The banking matrix is one of smoke and mirrors. A complex system of rules, regulations and policies that are established by governments, shareholders and other regulatory bodies. A monopoly designed to confuse, entrap & enslave.

Containing numerous agreements and contracts between banks and their customers (the depositors & borrowers) their matrix is meant to provide a stable and reliable framework in which banks can operate from. But does it? Let's take a closer look!

Banks are anything but transparent with how they use our money and the fees they charge us (the depositors) for the privilege of loaning our money to them so they can lend it out - over and over again and make squillions from it. This is called fractional reserve lending.

What is Fractional Reserve Lending/Banking?

Fractional reserve banking is a system in which only a fraction of bank deposits are required to be available for withdrawal. Banks only need to keep a specific amount of cash on hand and can create loans from the money you deposit. This amount used to be 10% and in the early 2020's that was changed to 0%.


  • Banks don't need to hold vast amounts of capital
  • Banks stimulate the economy by lending


  • Consumer panic can cause mass withdrawals and lack of capital
  • Too much lending can cause the economy to overheat
If the definition of insanity means doing the same thing over & over again expecting different results, then we are all mad!

Could History Repeat Itself - Absolutely!

One of the main concerns with fractional reserve banking is, because of this lending, there are insufficient funds if everyone were to withdraw their money at once, causing a run on the banks.

This can be witnessed by reviewing the Greek Financial Crisis.

In 2015, Greece defaulted on its debts to the International Monetary Fund amidst a global financial crisis. As a result, citizens flocked to the banks to withdraw their funds, and the banks were forced to close their doors to prevent a complete withdrawal of capital from a struggling system.

Further back in time, at the start of The Great Depression, consumers rushed to banks to withdraw all of their funds, leading to the collapse New York's Bank of the United States.

From a depositor perspective, banks are essentially highly-leveraged bond funds with payment services attached, and we naively trust them with our hard-earned savings.

And here we are today - on the bring of another collapse. Nothing changes if nothing changes! Despite lack of bank responsibility, we continue to lose, while they do not. Is it any wonder they are now pushing for a new a digital currency deception that gives them even greater control?

What other business do you know of that is allowed to continue doing whatever it wants with your money, regardless of the losses and crimes they commit, while no one holds them to account?

Would you continue doing business with anyone else who took advantage of you in this way this? I don't think so! Yet we have kept using banks for our loans - that's how they've gotten away with it for so long.

It just doesn't make sense to keep rewarding them with our business!

How does this effect Bank Lending?

Unfortunately, the relationship banks have with the government has lead to many misunderstandings and missed opportunities for businesses with rules around borrowing money seemingly made up as they go.

Restrictive & Intimidating

The banking matrix can be overly restrictive, limiting access to capital that businesses need to grow and expand - when it suits them. Having the monopoly on banking, allows them to put pressure on people to comply with their rules and regulations, or be penalised - without any recourse to them. This can be intimidating for smaller businesses in particular.

What are the alternatives?

There are some great alternatives to centralised banks that may be better suited to business loans.

NoBnk for example, is a peer-to-peer non-bank and private funding platform which provides business owners with access to a wider pool of lenders, flexible loan terms, innovative products, strategic solutions, business advice and customer service that banks no longer provide or are interested in.

Without big corporate shareholders to satisfy, non-banks are able to put our clients first and offer a more personable and custom designed approach.

There's no need for a matrix, doing business with us is easy. We facilitate the loan between lender and borrower, we do not touch or ask for any money upfront, therefore we cannot lend it out to others or take it for ourselves. We get paid our commission at settlement.  

Simple. Fast. Friendly. Effective. Our processes are fast, fair, flexible and non-complicated, often saving you a lot of time, stress and money. It makes sense to come to us first.

NoBnk gives you back trust, choice, security & control.

Ready to get started?

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