Theoretical foundations of the bank multiplier mechanism
The article describes the essence of the process of banking animation. Bank multiplier is a process of multiple increase (multiplication) of balances on deposit accounts with commercial banks when transferring them from one bank to another. Thanks to the banking multiplier, deposits are expanding by repeatedly increasing any new reserves received by the banking system, i.e. it determines the relationship between the amount of reserves that banks are required to keep in their accounts with the National Bank (required reserves), and the free reserves of their credit operations and bank deposits.