A bank with a reserve requirement of 20% can lend out 80% of any new deposit, but if the reserve requirement increases to 25%, it will still have the same lending capacity as before.

The reserve requirement is the percentage of deposits that a bank must keep on hand and not lend out. If a bank has a reserve requirement of 20%, it can lend out 80% of the money deposited. For example, if someone deposits $100, the bank must keep $20 and can lend out $80. If the reserve requirement increases to 25%, the bank now keeps $25 and can lend out $75. Even though the percentage of money it can lend has changed, the total amount of money it can lend from the new deposit is still the same, since it must adjust to keep the required reserves.