Central banks cutting the reserve ratio does not mean banks follow through.
All the major banks are raising funds while in expectation of rising bad debts as loans turn bad. They are also increase lending standards which slows lending.
The Keynesian view of the world is misplaced. Central banks think they control the economy but the reality is they cannot for demand and banks will operate in their own best interest.
Here is BOA who raised $26 B. This is in addition to the $66 billion set for bad loans.
Central banks cutting the reserve ratio does not mean banks follow through.
All the major banks are raising funds while in expectation of rising bad debts as loans turn bad. They are also increase lending standards which slows lending.
The Keynesian view of the world is misplaced. Central banks think they control the economy but the reality is they cannot for demand and banks will operate in their own best interest.
Here is BOA who raised $26 B. This is in addition to the $66 billion set for bad loans.
http://investor.bankofamerica.com/news-releases/news-release-details/bank-america-has-raised-26-billion-capital-plan-date
Posted Using LeoFinance
Increasing the reserves is not opposite of slashing of the reserve ratio. They work great together and increase the supply many times over a period.