Banking System

       Every bank depends on lending the money that their users deposits in them to earn money but they cant always lend out all of their reserves. In order to control their capital, a central governing entity regulates the portion of their reserves that can be destined to lending matters. This system is called fractional reserve banking and it appeared as a result of the great depression in the US.  During the depression many banks were forced to shut down as a result of people wanting to retrieve when the recession happened. To contradict this event the Federal Bank, created the FRS and this started a new era of economic stability.

       Independently of how the FED manages resources, expanding and contracting economy through structural adjustment policy. Banks are open to failure in the FRS and this just shows how much people depend on the system, to keep their assets safe but the system is not as strong as their marketing campaigns. The FRS can also lead bank to go wild earning insane amount of profit because usually the minimum reserves levels are never reached, in this cases growth is extremely fast but the risks are also huge. This reserve system was a temporary solution created to prevent recession but a new solution must be developed in order to have a truly stable economy. Just as how protective the system is, can also be misinterpreted for huge risks and comeback with a new economic disaster in the future.