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10 January, 19:52

As commercial banks keep more excess reserves, what happens to money creation

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  1. 10 January, 19:56
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    As commercial banks keep more excess reserves, money creation will be decreased.

    If the federal reserve does not control this excess, it will lower the value of the currency and will create inflation. Decreasing the money creation will limit the amount of money that could exist in the market hence preventing the devaluation of currency's value
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