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

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

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

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

So 10 of 110 is 11.

But it's the same idea.

I have 300 gold pieces of reserves

I'll open a bank account.

I have a fairly wealthy village.

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

He deposited the prize money in the bank.

I just give them a checking account.

The money rests in a safe at the bank.

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.

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.

Right?

And we went the fractional reserve route.

I want to deposit some money.

I trusted him with the money.

So what would be total demand liabilities?

All the money I make... that you keep for me.

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.

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.

Two deposits. One for 100,000. The second for 150,000.

The Balance

Balance

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.

Good morning, Melvin. Here's the money.

Oh, I have your winnings from last night.

So they need some place safe to put it.