In medieval times, many goldsmiths would offer to store gold in return for a fee. They provided anyone depositing gold with a receipt, which represented a legal claim on the goldsmith to exchange the receipt for the amount of gold written on it. if these receipts could be bought and sold and redeemed by someone other than the person who deposited the gold, were medieval goldsmiths banks? Briefly explain. Is multiple money creation possible in this system? Why and why not?

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Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.