competition wizard magazine published this article page no 60 Thus if this percentage is increased commercial banks have to deposit a larger portion of their money with the central bank and have a smaller percentage to lend out to the market. Hence a scarcity of funds is created and interest rates begin to rise. On the other hand if this reserve requirement is relaxed banks will have more funds to lend and as a result the interest rates will go down given the abundance of funds competition wizard magazine.
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