Simplified model of the basics of the banking system where money is on lent out, creating more money. System starts with $100 on deposit. Reserve requirement determines how much of this money must be held in reserve, and the remainder may be lent. Lent money is placed on deposit (potentially in another bank, bank in the same banking system). A fraction of that deposit is then lent, until the system reaches its maximum expansion of the money supply based on the original deposit size and the reserve ratio.