Economics
Banking System Regulation
Quick fact
After the 2008 financial crisis, global regulators agreed on stricter rules (Basel III) that require banks to hold up to 4.5% of their risk-weighted assets as common equity — a far cry from the near-zero capital some had before.
Why this is interesting
You’ve probably seen a bank’s vault door in movies — but did you know that banks aren’t allowed to keep all your money in that vault? In fact, they can lend out most of it, so what stops them from being reckless with your savings?