How does fractional reserve banking impact the value of cryptocurrencies?

1 answers

• Mr Sacha BonaventApr 24, 2023 · 2 years ago
  Fractional reserve banking can have a significant impact on the value of cryptocurrencies. When banks engage in fractional reserve banking, they essentially create new money by lending out more than they actually have in reserves. This can lead to an increase in the money supply and potentially inflation. However, the impact on cryptocurrencies is different because they are not tied to any central bank or government. Cryptocurrencies have a fixed supply, so the creation of new money through fractional reserve banking does not directly affect their value. Instead, the impact is more indirect and can be seen through changes in investor sentiment and overall market conditions.
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