DJP wrote:If loans are made
DJP wrote:
If loans are made out of nothing then there would be no restriction on when they could be issued.
I guess the restriction is whether or not the borrower has the ability to repay. Under the PM model of banking the bank only has to ensure their assets (the loan agreements) match their liabilities (deposits in accounts). If they start issuing dodgy loans to people and they get defaulted on then they are at risk at not being able to cover people wanting to withdraw their money.