If reserves in the banking system increase by $1 billion as a result of Bank of Canada lending to financial institutions of $1 billion, and chequable deposits increase by $9 billion, why isn’t the banking system in equilibrium? What will continue to happen in the banking systemuntil equilibrium is reached? Show the  T-account for the banking system in equilibrium.

The desired reserve ratio on chequable deposits is 10%, banks do not hold any excess reserves, and the public’s holdings of currency do not change.