How does fractional reserve banking work

grofus2

Is it true that banks lend money as a debt. Ie. Lonee applies for a loan, let's say €5000. The Lonee then signs a loan agreement which then becomes a negotiable instrument according to the bills of exchange act. The bank then monetizes the negotiable instrument and " lends" the amount shown on the note to the lonee. Then the bank demands monthly payments + interest from the lonee to satisfy the debt for a set period of time, when the reality is the lonee funded the 'loan' all along. Isnt this true for mortgages, credit cards and all bank loans?

Peregrinus

https://www.boards.ie/discussion/2058200730/how-does-fractional-reserve-banking-work

You're in the wrong forum, grofus2. This forum is for Bank of Ireland specifically to provide customer support. If you're interested in a broader discussion of how banking works, maybe repost this in the economics forum: https://www.boards.ie/categories/economics