(Solution) - Explain how increasing the required reserve ratio impacts banks money -(2025 Original AI-Free Solution)

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Explain how increasing the required reserve ratio impacts banks? money creation process.
China?s central bank will raise its reserve ratio requirement by a percentage point to a record 17.5 percent, stepping up a battle to contain lending growth. Banks? ratio of excess reserves to deposits was 2 percent. Every half-point increase in the required reserve ratio cuts banks? profits by 1.5 percent.