Comment: good info. plus, canada,

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good info. plus, canada,

good info. plus, canada, australia, and others that run their own fiat currencies operate w no reserve requirements. leverage has to do with capital vs. assets ratio, and is part of both prudential management as well as regulatory requirements.

so much of the problem here is the confusion of requirements to maintain reserve balances with the central bank, and capital requirements. capital is not reserves, reserves are not capital. reserves today are a tool of the Fed to manage interest rates and manage clearing operations (settling balances between banks). it has no role analogous to the role it played when banks had to hold gold or gold notes to redeem deposits. reserves today can be created or uncreated by the central bank at will, and that is how it manages the basic interest rate, the fed funds rate.