European Banking System Questions...

[Kama45]

I have been told certain European banks have to provide a service before they can loan a large sum of money (they can loan up to 10 times the amount of the asset). So if one of these banks provides a sercive of $100,000, they can loan $1,000,000.

Is this true? If so, what countries? What is the point of having to provide a service before they can loan money? What “services” count? Also, I tried googling for more information, but came up with nothing. Any link suggestions with relevant info?

Thank you.

[Kama45]

Answer my questions you heathens! :mad:

[glee]

@Kama45

I have been told certain European banks have to provide a service before they can loan a large sum of money (they can loan up to 10 times the amount of the asset). So if one of these banks provides a sercive of $100,000, they can loan $1,000,000.

Is this true? If so, what countries? What is the point of having to provide a service before they can loan money? What “services” count? Also, I tried googling for more information, but came up with nothing. Any link suggestions with relevant info?

Thank you.

Perhaps you should ask the source of your ‘information’.

Here in the UK, I have never heard of any of this.
(I have had both a mortgage and an overdraft, without any ‘service’ involved.)

[Spectre_of_Pithecanthropus]

Could they be talking about reserve requirements? That concept is fairly standard. If a bank receives 1000000 in deposits they can lend out several times that much, on the theory that the person who deposited the money isn’t likely to show up the next morning and ask for it.