Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Watch the Loan-to-Deposit Ratio
Episode 121 of Monetary Policy Explained with Fexingo dives into the loan-to-deposit ratio (LDR) and why central banks monitor it as a signal of bank funding stability. Lucas and Luna unpack a real example from the 2023 regional banking crisis in the US, where high LDRs at Silicon Valley Bank and First Republic signaled vulnerability to deposit runs. They explain how the LDR connects to the money multiplier, reserve requirements, and why a ratio above 100% means a bank is funding loans with wholesale borrowing. The conversation also touches on how central banks like the People's Bank of…
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