One more quick jquestion about FRB
As a lot of you know I am trying to learn more about fractional reserve banking. So quick question that always confused me...I see articles saying AIB's loan to deposit ratio is 160%, so there could be a run on the banks because they lent out more than they have- why would there be? Isnt 160% not bad at all? If the reserve requirement is 10%, then the loan to deposit could go up to 1000%...what is so bad about a loan to deposit above 100? Isnt that the whole concept of FRB? Why would there be a run on the banks when the system has been set up to keep it overt 100%?
If the answer is obvious, my apologies.