If a bank has a 5% cash reserve requirement and a $100 deposit how much of that $100 dollars can they loan out?
a) $95 backed by the remaining $5 (5% reserve)
b) $2000 backed by the entire $100 (5% reserve)
Hint: They make a lot more charging interest on $2000 than they would on $95...
...As in here’s one way the current system creates money out of thin air.