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The Theory of Credit Creation

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Credit creation is a mechanism whereby deposit money increases as banks repeatedly cycle through deposits and loans in a chain reaction.
Banks are required by law to maintain statutory reserve deposits, which involve depositing a certain percentage of their deposits with the Bank of Japan (or retaining it on hand).
Initial deposit amount (primary deposit)
Reserve Requirement Ratio
Total Deposits 
This can be calculated using the sum of an infinite geometric series.
Total Deposits = Initial Deposit Amount ÷ Reserve Requirement Ratio

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