you say that the central does not really use alterations in the reserve requirement
No where in my discorse with you did I say that. Of course they can alter the reserve requirement. You're not having a language problem, your having a problem understanding the mechanism the U.S. Central Bank uses to target the wholesale price of money. The reserve requirement is a key element in that mechanism. In the U.S. the reserve accounts are also the accounts through which day to day banking transactions are cleared each night. These accounts, in the U.S., have little to do with a banks ability to lend other than in a trivial way. I mentioned that the central banks in some Countries, e.g. Canada, do not have reserve requirements. Do you think that those banks can therefore not lend. Of course not.
It is clear to me that you have misunderstood the role of bank reserves in the U.S. Banking system, and likely therefore also in the British banking system, if in fact the British banks have a reserve requirement. I know only about U.S. Money and Banking. I know nothing of British banking other than what little I have read.
It seems to me that you have confused a Bank's reserve requirement with its capital requirements, the latter relating the the quality of a bank's loans. Capital requirements are there to protect a Bank's financial integrity, whereas the reserve requirement is the means by which the fed regulates the price of money that the bank lends out.
I don't have the time or inclination to teach banking and finance to you, and in any case I am not the one to do it. But detailed correct information
is available. There are several good books I have in my library you purchase and read. I'll only mention one in particular, because it is cheap, widely available, clear, and it is, so far as I'm able to tell, correct except for a few minor quibbles I have. It is Warren Mosler's little paperback entitled "Soft Currency Economics II -- What Everyone Thinks they Know About Monetary Policy Is Wrong." Buy this book and read the second paragraph on Page 24. The paragraph that begins, "Bank managers generally neither know nor care about aggregate level of reserves in the Banking system.
Bank lending decisions are affected by the price of reserves, not by reserve position. ..."
You have consistently implied that banks build up reserves to lend, by selling assets, increasing deposits, or other ridiculous notions. Banks borrow reserves to lend out, but
they do it contemporaneously with lending; Not in Advance! Why? Because traditionally central banks have not paid interest on excess reserves in order to discourage banks from holding excess reserves. That changed only in the last ten years with the advent of the financial crisis. Banks, via QE, found themselves with excess reserves and their was insufficient demand to lend out. The aggregate position remained in excess, which would cause the funds rate to be pinned at virtual zero, so the fed board of governors decided to pay a very small amount of interest on excess reserves to put a floor under the funds rate. But this rate is not sufficient to make banks borrow excess reserves in advance of lending. I don't know what the current reserve accounting period is, these things change -- it used to end on Wednesdays -- but typically, I think, banks have a day or two after the make a loan to borrow what the need to adjust their reserve.
Let me summarize for the umpteenth time: Banks don't have to build up their reserves to lend more money, the amount they can lend is NOT limited by their
current reserve position. Ordinarily, they simply borrow to lend and to adjust their reserves. What limits the loans they can make is their capital requirements;
NOT their reserve position . The latter is always adjustable via interbank, fed funds borrowing and lending , or failing that, via the fed discount facility.
