Abstract
Since the advent of fractional reserve banking (FRB), banking systems have been subject to runs. In extreme circumstances these runs have led to prolonged periods of economic dislocation such as the Great Depression, which have taken years – sometimes decades – to resolve. Yet despite these pitfalls, FRB is still considered to be the only way to organize the banking system. In this paper I explore the perceived advantages of FRB and suggest ways that these can be achieved without the pitfalls.
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