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# Bank Economic Stability

## Definition

The condition of banking systems that maintain appropriate reserves, prudent lending practices, and stable note circulation to support rather than destabilise the broader economy. This stability is essential for economic development.

## Source Chapter

Book II, Chapter 2

## Context

Smith analyses the conditions necessary for banking stability and its importance for economic development. He shows how stable banking supports commerce and production while unstable banking can cause significant economic disruption.

## Economic Domain

General Theory

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