1 SCENARIO 3:Fractional-Reserve Banking If this $640 is eventually deposited in Thirdbank, then Thirdbank will keep 20%of it in reserve,and loan the rest out: THIRDBANK'S balance sheet Assets Liabilities reserves $128 deposits $640 loans $512 CHAPTER 18 Money Supply and Money Demand slide 10 CHAPTER 18 Money Supply and Money Demand slide 10 SCENARIO 3: Fractional-Reserve Banking THIRDBANK’S balance sheet Assets Liabilities reserves $640 loans $0 deposits $640 ▪ If this $640 is eventually deposited in Thirdbank, ▪ then Thirdbank will keep 20% of it in reserve, and loan the rest out: reserves $128 loans $512 1