Mike Bryan, former vice president and senior economist at the Federal Reserve Bank of Atlanta, gives an economist's view of the inner workings of fractional reserve banking. He describes the role of the Federal Reserve in the US banking system and clearly explains concepts like the money creation potential of deposits and the money multiplier.
Section 1: Historical Background (6:44)
Section 2: How Fractional Reserve Banking Works (4:42)
Section 3: The Importance of Fractional Reserve Banking (1:54)