Problem 11

Introduction

A bank is a sort of financial institution that accepts public deposits, creates demand deposits, and makes loans. The bank may use financial markets to carry out loan operations, either overtly or implicitly. Banks are heavily regulated in most regimes because they play such a crucial function in financial security and the country’s economy. In most nations, a program called fractional reserve banking has been established, wherein banks keep liquid assets equivalent to a percentage of their present obligations.