Reserves of a bank is much less in comparison with the bank’s total deposit debts. This may seem very dangerous to you. If you had money in a bank, maybe you would wish to withdraw and deposit it to another bank whose reserves are equal to its debts in form of deposits. Unfortunately, this would be not possible. Likewise, all banks hold an amount of cash less than their deposit debts as reserves. This operating method is named as fractional reserve banking. Fractional reserve banking can be defined as a banking system in which banks hold an amount of money less than their deposit debts as reserve.