Fractional Reserve Banking System (Frb) Practices In Conventional And Sharia Banking In The View Of Economics Experts
Keywords:
FRB, JUB, Inflation, Sharia EconomicsAbstract
The practice of Fractional reserve banking (FRB) in Indonesia is a bank activity of maintaining a portion of customer savings as deposits or deposits at the central bank, and then if there is a payment obligation to the customer, these savings can be used. Then, in other activities, namely financing, it can also be said to be creating money. The creation of excess money is what gives rise to inflation. Is this inflation mostly caused by conventional banks or Islamic banks?
The aim of this research is to find out the practices and opinions of economists regarding the implementation of the FRB. The research method used is literature study.
The research results show that Firstly, the practice of Fractional Reserve Banking is applied in both Conventional Banks and Sharia banks, this is reinforced by the statement of Central Banking Research Expert Ascarya that Sharia Banks apply fiat money as the main transaction and fractional reserve banking in money creation, because Sharia banks are still fighting interest and implementing profit sharing. Second, if the amount of money in circulation (JUB) increases, the price level in the market will increase, and this will cause inflation. This high inflation will lead to a bubble economy. Third, both Sharia and conventional banks apply FRB in money creation, but it is important to note that the biggest contribution to inflation remains conventional banks.
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