1, partial reserve system:

The amount of reserves is directly related to the amount of derivatives deposits. The ratio of reserve drawn by banks to total deposits is called deposit reserve ratio. The higher the deposit reserve ratio, the more reserves are withdrawn, the less funds are available to banks, and the amount of derivatives deposits is correspondingly reduced; On the other hand, the lower the deposit reserve ratio, the less reserves are withdrawn, the more funds banks can use, and the amount of derivatives deposits increases accordingly.

2. Non-cash settlement system:

Under the modern credit system, banks lend money to customers by increasing the balance of their deposit accounts, and customers complete their payment by issuing checks. Therefore, when banks increase loans or investments, they also increase deposits, that is, they create derivative deposits. If customers get loans from banks by withdrawing cash, derivative deposits will not be formed.

Conditions for credit creation of commercial banks;

1. Banks create credit circulation tools, and the creation of credit circulation tools is the premise of credit creation. From bank notes to checks and bills.

2. The partial reserve system is relative to the full reserve system.

3. Non-cash settlement system. In the case of a relatively sound commercial banking system, as long as there are a certain number of original deposits and commercial banks issue loans in turn, new derivative deposits can be created.

The so-called credit refers to the unilateral transfer or transfer of value without the premise of repaying principal and interest. In short, lend money to others. Credit has various forms and complex types, which can be divided according to different standards. For example, credit can be divided into six types: commercial credit, bank credit, national credit, consumer credit, private credit and international credit.

Baidu Encyclopedia-Creating Credit