Aziz, J. (2014) “Is It Time To End Fractional Reserve Banking?“, Pieria Network, 12 Μαΐου.
The moment you realize that the financial system has an inherent fragility at its heart — that people can simply lose confidence in the system, withdraw their deposits en mass, and because banks only keep a fraction of their deposits on hand cause a liquidity crisis where the bank runs out of money — is undoubtedly a scary one. And even though the global financial system experienced over half a century of relative stability from the 1930s and 2008, where the existence of lenders of last resort like the Federal Reserve and the Bank of England acted as a stanch against large scale liquidity crises, the re-emergence of bank runs (or at least shadow bank runs) and liquidity crises in the wake of the sub-prime housing crisis reawakened many to the fragility of fractional reserve banking.
This is true to such an extent that we have seen multiple proposals for an end to fractional reserve banking by implementing full reserve banking from a diverse group of thinkers — Positive Money, the International Monetary Fund, Laurence Kotlikoff, John Cochrane and Martin Wolf. My colleague Frances Coppola gave a good, concise rundown of the detail of some of these proposals in 2012. And of course, there also exists a wing of Austrian economics that wants to squash fractional reserve banking simply through demanding an end to lender of last resort functions, so that bank runs doom banks who have acted “irresponsibly” by overextending their lending beyond their reserves face bank runs. The idea is that fractional reserve banking could not survive in a “true free market” system without government backing.
Σχετικές αναρτήσεις:
- Gordon, N. J. & Ringe, G. (2014) “How to save bank resolution in the European banking union“, VoxEU Organisation, 30 Απριλίου.
- Bauer, M. & Demary, M. (2014) “European Banking Union: Status of Implementation and the Need for Improvement“, Konrand Adenauer Stiftung, 23 Απριλίου.
- Horne, P. (2014) “The Euro at Age 15 – Is it a Reserve Currency Yet?“, The European Institute, Φεβρουάριος 2014.