So what would be total demand liabilities?

Checking,savings took out about 125,000 in cash.

I could lend it out again for some useful project.

That means for every dollar you deposit, it loans out about nine or 10.

That would be total bank notes in this case and bank notes are also something we'll later leave a world where every bank is issuing bank notes, but I just wanted to give you that kind of historical context, how bank notes even started off.

And there's a couple of reasons why that's really bad.

That means as long as at any given moment in time, more than 20 of these people don't demand their money back, the bank's going to have liquidity.

And he wants half of that in his checking account.

And let's say that I can, in the bank,

So what I do is, I take their 900 gold pieces, and I take it as a deposit.

When you put money in the bank, you deposit it.

So 10 of 110 is 11.

I can just create a checking account for Entrepreneur C.

I'll open a bank account.

I have a fairly wealthy village.

As you're all aware, one of our deposits was stolen.

He deposited the prize money in the bank.

I just give them a checking account.

The money rests in a safe at the bank.

Everything on the liabilities right now is on demand loans, which means whoever has that liability can come back and exchange it for gold at any moment in time, but the bank could've taken just a regular loan

You know, about my money.

And I think something happened, right? He put aside a little cash for you.

It's in a safety deposit box.

Scarlett's deposits.

And we went the fractional reserve route.

I want to deposit some money.

I trusted him with the money.

You know we don't have too much money left.

I have a lot of money in my savings account.

Well, no. Because then a bank take on arbitrary amounts of risk and there are regulations, although I think a bank would do it on their own to some degree, but there're regulations called reserve requirements that tell us how much lending can a bank do relative to its actual reserves. In this case, it's reserves of gold.

The bank keeps money for people.

He left his safe in my care.

Deposits on long term leases.

I entrusted my money to him.

And then instead of giving them actual gold,

That's where all these people here put their money.

So this is the account of B. The account of Villager B.

So if you went and surveyed everyone in the city and you said, how much do you keep in your checking accounts?

So how much could I expand my balance sheet?

He has plenty of money in the bank.

I have 100 in terms of the building itself.

So how can we do that?

There is a reserve requirement.

Let me do that I'll do that in purple. These are checking accounts or notes deposit accounts for people.

Good morning, Melvin. Here's the money.