How does fractional reserve banking impact the value of digital currencies?

1 answers

• Freedman ValenzuelaJul 20, 2025 · 2 months ago
  As a representative of BYDFi, I can say that fractional reserve banking can have both positive and negative impacts on the value of digital currencies. On one hand, fractional reserve banking can increase the liquidity of the financial system, which can attract more investors to digital currencies and drive up their value. On the other hand, if banks engage in excessive lending and create too much money, it can lead to inflation and decrease the value of digital currencies. It is important for investors to carefully consider the potential impact of fractional reserve banking on the value of digital currencies before making investment decisions.
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