Talk:Full-reserve banking/Archive 1

Lending money
The article states that a full-reserve banking system eliminates the incentive for banks to lend money. Doesn't it in fact make it impossible for a bank to lend money? If $100 in total are deposited to bank A, for instance, it cannot lend a single dollar without infringing on the full-reserve rule. The only exception to this would be term deposits, which could be lended because they are not counted when calculating the reserve ratio. —Preceding unsigned comment added by 70.48.38.86 (talk • contribs) 06:51, 28 October 2005


 * Correct, a bank would not be able to lend out demand deposits. Under a full-reserve system, however, there would be a far greater incentive for customers to make term deposits when possible. Term deposits would presumably pay interest, whereas demand deposits would probably pay negative interest (via safekeeping fees, as the poster below points out).  So if the bank can attract a lot of term deposits onto its books, it will have no problem making loans as long as it simply matches the maturities of its loans to the maturities of its term deposits.  This whole line of thought is surprisingly missing from the article.  I'll consider taking it on. --Cdelite (talk) 18:41, 3 October 2008 (UTC)


 * The bank could only lend out of it's own profits, rather than lending their clients cash. Banks would have to charge customers for safe storage of their deposits. At least that's how I think it would work. --nirvana2013 14:14, 9 February 2006 (UTC)


 * Both wrong. The bank would be unable create new money in the form of credit. That is, it could lend part of the $100 (possibly with the agreement of the deposit owner) but not create an extra 900 (credit)dollars by simply recording it as book-keeping entry. This is what happens under the current franctional-reserve system. In this light, both "fractional-reserve" and "full-reserve" adjectives are possibly misnomers. Something is also wrong with the introductory paragraphy but I don't quite know how to rewrite it. -- Janosabel 16:24, 2 June 2007 (UTC)


 * It is you who are wrong - in current "fractional reserve" system, a bank coud not lend $900 for $100 of deposits. It can only lend $90 for $100 in deposits. —Preceding unsigned comment added by 85.139.171.190 (talk) 23:44, 2 October 2007 (UTC)


 * No, it is YOU who are wrong - a deposit of $100 WILL indeed create another $900 worth of credit in a fractional reserve system with reserve ratio 0.1. Please get your economics and mathematics right before you call others wrong. Thank you. —Preceding unsigned comment added by 220.238.251.161 (talk) 07:41, 10 October 2008 (UTC)


 * Correct as far as it goes, but if the $90 lent is deposited in a bank, that bank can lend out an additional $81. And if that $81 is re-deposited, its bank can lend out an additional $72.90.  This is the well-known "money multiplier" at work.  If you work it out ad infinitum, the banking system (as a whole) could in fact lend out a total of $900 on the original $100 deposit (based of course on a 10% reserve requirement).  I think that's where poster Janosabel was coming from; his/her words just didn't come out quite right. --Cdelite (talk) 18:00, 3 October 2008 (UTC)

We made a compilation of FAQ with professor Joseph Huber:

FAQ

Paul Nollen 11 feb 2006


 * What is the direct source for this long Q&A? If there is a link we should simply provide that. If there is no source we shouldn't mention it at all. Either way, it doesn't belong here. -Will Beback 20:29, 11 February 2006 (UTC)

This FAQ is within the authorized limits and an answer to the question above. There is for the moment no direct link. The FAQ is compiled in cooperation with professor Huber. joseph.huber@soziologie.uni-halle.de

Paul Nollen 12 feb 2006

ok I made a link to the FAQ. Better so?

Paul Nollen 12 feb 2006


 * Yes, much beter thanks. -Will Beback 19:46, 12 February 2006 (UTC)

In response to --nirvana2013 14:14, 9 February 2006 (UTC)

That isn't quite correct. What it means is that commercial banks become analogous to "Mutual Funds" or other investment organizations. Banks would lose their money creation capability. Please see the wikipedia article on money creation.

Note that this does not mean that there is no incentive to lend money. The incentive is still there, and is the same as that under a fractional reserve system: to earn interest on the money lent.

While one might argue that commercial banks might then be inclined to charge their customers to hold money for them, this is already the case for many small accounts. Many banks charge monthly or yearly fees for the mere existance of a checking account, regardless of whether any checks are actually drawn on the account during the period. At least they do in the Southeastern United States of America.

Deposit multiplier equals zero or one? The linked page does not quite define the multiplier, but multiplication by zero seems to imply deposits disappear... Doktor 21:20, 13 March 2006 (UTC)

Misleading lead
I think the lead is technically correct, but it implies full-reserve banking is somehow related to commodity money. Which is not surprising since advocacy of the two concepts is correlated. But full-reserve banking is compatible with fiat money. Brock (talk) 23:25, 25 March 2008 (UTC)

The lead is not correct technically on top of being misleading. Please see www.monetary.org for a a good analysis of full reserve banking.01001 (talk) 18:20, 31 March 2008 (UTC)

Hypothetical?!
Full reserve banking has existed for centuries, it is obviously not he dominant system now, but you only have to look at the history of the Bank of Amsterdam for 200 years or the swiss banks just to mention two historical cases. So why does it say "A hypothetical practice"?? Also Venetian and Florentine banks in the Renaissance and some California banks in the 19th century.


 * The article also indicates that Islamic banks follow this practise and so I agree that the term hypothetical is inappropriate. Colonel Warden (talk) 12:01, 11 September 2008 (UTC)


 * The sentence about Islamic banks says that "in theory" they are 100 per cent reserve, but in practice, this is not the case, and no examples of 100 per cent reserve banking are observed . Similarly, in theory, they don't lend money at interest. But theory and practice are not the same - there are all sorts of methods for getting an interest-like return on money lent, and for lending against reserves that are supposedly intact. As for the historical examples, it's not clear that they correspond to the modern sense of the term "bank", as opposed to, for example, a safety deposit facility. JQ (talk) 12:23, 11 September 2008 (UTC)


 * You seem to be begging the question. The Bank of Amsterdam was obviously a bank, as our article describes. Colonel Warden (talk) 12:33, 11 September 2008 (UTC)


 * A fair point. It would be useful to include a historical section covering the emergence and disappearance of full reserve banking. I've put in a stubby section to that effect.JQ (talk) 12:54, 11 September 2008 (UTC)


 * Another "fair point" would be to admit that BullionVault and other professional gold hoarding services are acting like full reserve banks and are (arguably) modern-day examples of full reserve banking.


 * On what basis? BullionVault doesn't claim to be a bank and doesn't appear to offer even basic banking services. They are, as they say, just a storage facility. You might have a better argument with e-gold, but there seem to be lots of problems there. JQ (talk) 07:50, 12 September 2008 (UTC)


 * I find the current wording overstates the history: the Smith text at the Bank of Amsterdam article compares it to banks elsewhere, which are "less sound" in this comparison than the other ones. This strongly implies that the BoA was an exception to the general rule. If so, saying "but was displaced by fractional reserve banking after 1800" implies that it was the main form of banking, and that there was a specific time frame. It seems from the text that full reserve banks were mostly always marginal. Comments from others?--Gregalton (talk) 15:45, 12 September 2008 (UTC)

Please
Please don't attack me again. You've just deleted refs. Come on, where's your humanity? - $laveryWorldwideInc (talk) 05:03, 7 September 2008 (UTC)

Lede
Moving on, we have a statement in the lede Proposals for the restoration of full reserve banking have been made, but are generally ignored or dismissed by mainstream economists.. This wording does not seem satisfactory. For one thing, the manner in which banking is practised as much a matter of politics and business as a matter of economic theory. And for another it is not clear that economics has a mainstream per the adage that there are as many opinions about economics as there are economists. It would be better to say that full-reserve banking is not normal nowadays except for the Islamic banks that aspire to it and avoid a judgemental opinion. Colonel Warden (talk) 14:20, 11 September 2008 (UTC)


 * The claims made to support the "restoration" (I question whether one can say this, but for the time being, whatever) are essentially economic and financial, so to say it is ignored by mainstream economists is entirely pertinent.
 * Economics certainly does have a mainstream - that's not a real argument.--Gregalton (talk) 17:39, 11 September 2008 (UTC)


 * Be that as it may, a contentious statement of this sort requires a source. Contemplation of the sources may help advance the argument. Colonel Warden (talk) 18:11, 11 September 2008 (UTC)


 * Then flag it with the appropriate citation request.--Gregalton (talk) 21:36, 11 September 2008 (UTC)

Article mixes full-reserve banking with "full-reserve currency"
By "full-reserve currency" I mean (central) banknotes that are 100% backed by warehoused commodities (representative money, like people think History of money works). In the case of currency boards the "commodity" is foreign currency.

A full-reserve banking article should contrast to the fractional-reserve banking. I suggest deleting everything that has got to do with "full-reserve currency". Najro (talk) 18:02, 12 September 2008 (UTC)

Clear as mud
The explanation of how a bank can maintain its 100% reserve by lending against a commodity or "debt free" government currency needs explication. Please. Sounds something like William Jennings Bryan's advocacy (if memory serves) of a monetary base whose elasticity would be tied to bankers acceptances. But I'm no economist. Can someone flesh out the details? Captqrunch (talk) 15:32, 5 October 2008 (UTC)

This page gives too much credibility to an impossible or near-impossible economic theory
It is unbelievable that such a topic can be given such weight on Wikipedia. The description on Full-Reserve Banking is good, and the page itself isn't too shabby. However, any mainstream economist will no doubt tell you that Full-Reserve Banking simply doesn't work. Not only because Monetary Policy is negated, but also because Banks would lose most of their profit.

The page is written as though a debate still exists on the issue - not even Islamic Banks do this in practice. The article should be more factual and realistic - a Macroeconomics textbook (such as Introduction to Macroeconomics, Bernanke, for example) easily refutes this theory. A quick discussion on the importance of the Money Multiplier here would be very helpful as well. Seriously, how can economics students or anyone else who is new to the subject understand predominant trends in the world today if all they get is this confusing whiff about the supposed "advantages" of Full-Reserve Banking?

This article needs to be explicit and explain - exactly why the Banks of today's world adopts the Fractional-Reserve Banking System. 220.238.251.161 (talk) 07:53, 10 October 2008 (UTC)


 * "Such weight"??? It's one article on the topic! What else do you want?  Where else would you put it.  If you want to read an article on modern banking practice, there's fractional reserve banking, banks, finance, central banking, IMF, Federal Reserve as well as a whole host of others.  No one has said that this practice exists or predominates.  The arguments are real and referenced.  Censorship is evil.  Full reserve banking is not.  —Preceding unsigned comment added by 60.242.186.198 (talk) 05:36, 12 October 2008 (UTC)

Irving Fisher advocated full-reserve banking. If I'm not mistaken some of his ideas are gaining currency. —Preceding unsigned comment added by 159.121.166.99 (talk) 17:11, 4 December 2008 (UTC)

First, Irving Fisher's propounding of full-reserve banking should provide enough currency that the page be continued. Second, his treatise on the subject of Debt-deflation Theory is one of the most widely discussed TODAY on the financial blogs.(NakedCapitalism, Interfluidity and Others) Third, a debate still exists on this subject. Shall we? Finally, we are all too painfully aware of the fallacies of conventional economic-financial wisdom, notable of the Bernanke's out there, that have placed the well-being of our country in the grips of the extremely pro-cyclical nature of both fractional-reserve banking, and also investment-securitization. Try the money-multiplier in reverse. Milton Friedman (does he count) totally supported Fisher's full-reserve banking in his Financial and Monetary Framework for Economic Stability. So, why doesn't it work, again?Joebhed1 (talk) 00:13, 29 March 2009 (UTC)

Maturity-matched banking
Reply to Cdelite (talk) 18:41, 3 October 2008 (UTC): I'm not sure the proposal fits best into this particular article. It is because when the bank lend the money of a term deposit, there is the chance that the borrower will not pay back. So the banks ability to pay back the money to the lender depends not on the bank itself, it depends on the borrower. It is not the bank that keeps reserves, it has "outsourced" the keeping to the borrower. But maybe the matching of maturities can be expressed in terms of "full-reserves" in some way...

Maturity matching cannot be inflationary (compare to Real bills doctrine). This is because the money can only be at one place at a time. But at a bank run the money will end up in two places at the same time, both at the borrower, who has not yet paid back, and at the lender, which has withdrawn his money from the bank, clearly inflationary. (Assuming that the bank has been able to lend money to survive the bank run from a lender of last resort, that is just printing new money).

More info at Talk:Bank_run and Talk:Bank regulation. Najro (talk) 17:52, 10 October 2008 (UTC)

A good point I believe! Full-reserve banking doesn't sound like anything but a business of keeping one's property in a safe. The real issue with the current banking system is not % of required reserves, but the mismatched maturities. Kura440 (talk) 12:05, 5 February 2009 (UTC)

Way too much original research
I was sent to this article by someone who said it supported a claim that full-reserve banking is in current use. None of the claims to this effect are supported, and it does appear that much of this article is original research. This is related to the POV problem that is already in the article: it is clearly advocating a full-reserve banking system. But the OR problem is separate. The article should cite reliable sources (preferably, peer-reviewed articles in economic journals, with appropriate weight given to mainstream economists) instead of playing the advocate. Eubulides (talk) 18:29, 31 December 2008 (UTC)


 * Virtually every sentence is ref'd. It's got more refs than Neo-Keynesian Economics.  It is repeatedly stated at least twice that mainstream economics does not discuss FullRB.  The first para states that FullRB was displaced by FRB over two centuries ago.  Could you please contribute mainstream critiques or discussions of FullRB rather than state that the article is OR, which it clearly is not.  It is not advocating anything; it is putting the case for and the case against FullRB.  If you think it is "unbalanced" in any way, please feel free to add mainstream (ie non-Austrian) published discussions of the pros and cons of FullRB in the article.  I've been searching for ANY discussion of FullRB in the mainstream literature and cannot find anything.  Hence the need to go to Austrian economics to find it discussed fully.  Similarly an article on "communism" may have a predominance of references to Karl Marx.  That is not "unbalanced"; it is simply appropriate.  Perhaps you have little background in Austrian economics and do not know the background to the ongoing dispute between the mainstream and Austrianism.  That could explain why you consider clearly ref'd and decades-old discussions OR.  —Preceding unsigned comment added by 60.241.127.88 (talk) 10:04, 7 January 2009 (UTC)


 * Many statements are not sourced. For example, the statement "Proposals for the restoration of full-reserve banking have been made, but are generally ignored or dismissed by mainstream economists." is not sourced. I added some more tags for claims that are not sourced; many of these claims are OR. When you can't find any mainstream sources for a topic, that is an indication that the topic may not be suitable for Wikipedia. I don't think we need to go that far, as there are a few mainstream sources on full-reserve banking; it's just that the article isn't using them, and is sourced almost entirely by fringe sources. Eubulides (talk) 10:44, 12 January 2009 (UTC)


 * How can a statement like " proposals are generally ignored or dismissed by mainstream economists" be sourced? If major media, economic publications, etc. are all ignoring such proposals (see the Monetary Reform Act), should a Google Search Link be posted showing no discussion of the topic from mainstream sources?  —Preceding unsigned comment added by 71.236.11.79 (talk) 17:51, 18 March 2009 (UTC)

Citations to entire books are too vague
Many of the citations in this article are to entire books. That places too much burden on the reader. They should be to page numbers within the book, or at least to chapter names in the books. For example, The Mystery of Banking is more than 300 pages; one can't reasonably expect a fact-checker to scan them all to verify a claim. Eubulides (talk) 10:46, 12 January 2009 (UTC)


 * Agreed. I just did a word search for "full reserve" on the pdf of "The Mystery of Banking" and got zero hits!

Reissgo (talk) 11:23, 31 July 2009 (UTC)

[::]If you read the ENTIRE discussion on central banking and fractional-reserve banking, there is no comment by Rothbard on full-reserve banking.

This entire discussion is not supported. WHO says that with full-reserve banking there will be no government monetary policy? Not the Chicago Plan for Monetary Reform, and not Milton Friedman.

There should be a more clear articulation of what the issues really are, and what the options. Both progressive and austrian economists and monetary reform advocates support full reserve banking. There must be something there. Joebhed1 (talk) 01:34, 3 September 2009 (UTC)

Establish auto-archive
Will do so. Objections here.--Gregalton (talk) 20:18, 25 February 2009 (UTC)

Free Lakota Bank
It seems pretty clear that this "bank" consists of little more than a website established by a couple of activists, themselves a breakaway from a fringe Sioux nationalist organization. Any FRB enthusiasts who send their US dollars there are likely to be liberated from the chains of fiat money more completely than they expect. Of course, that's WP:OR and doesn't belong in Wikipedia, but let's avoid endorsing what is almost certainly a scam.JQ (talk) 11:53, 31 March 2009 (UTC)

The “Case for”
The “Case for” section is written as-if by one of two parties in an adversarial system; one can practically see him or her counting-off each point on his or her fingers. That's not the proper way for an encyclopædia to explain things. —SlamDiego&#8592;T 10:06, 9 August 2009 (UTC)

Some clarification, please
Fractional reserve banking means that if I put £10 into my account the banking system can lend £90 credit money to someone else. My £10 "real money" is the reserve.

The logical reverse of this practice would be that the bank lends (with my specific agreement, maybe) out £9 of my deposit, keeping £1 as reserve.
 * Maybe "full reserve banking" can only apply to the total banking system. If one bank lends, the total of its deposits is reduced, and wherever the lent money is deposited (could be the same bank but the account of a different customer) again, the amount of total deposits is increased. Janosabel (talk) 18:30, 19 October 2010 (UTC)

'''[comment: This is exactly what already happens. As unlogic as this may sound: keeping 1 and lending 9 is not the reverse but the exact same thing as keeping 10,lending 90. If the bank would keep 1 and lend 9, this 9 would be spent in the economy and eventually redeposited at a (or the same) bank. Now the bank would keep 0,9 (10% of 9) and lend out 8,1 (the rest). The 8,1 would be deposited again and the bank keeps 10% of that: 0,81 and lend out 7,29. This cycle repeats itself over and over. The mathematical result is that the bank(s) will eventually have kept 10 (1+0,9+0,81+...)and have lend out 90 (9+8,1+7,29)...... Only if the money would be taken out of circulation, this cycle is interrupted. So, today's practice is keeping 1, lending 9 and the result is keeping 10, lending 90. The multiplying/creation of money is inevetable in a fractional reserve system, no matter how go about it.]''' —Preceding unsigned comment added by UserChrisWiki (talk • contribs) 17:00, 20 November 2009 (UTC)

Surely this makes more sense than insisting that, for every £10 the banks lend they should somehow keep another £10 in reserve.

Maybe the term "full-reserve banking" is a confusing misnomer. Janosabel (talk) 22:05, 17 April 2009 (UTC)

To answer Janosabel, I think the point of full reserve is to separate loan banking and deposit banking. When you give the bank money for a loan, you shouldn't be able to still use that money while it is loaned out (which is what checking accounts currently allow) while if you give the bank a deposit that you intend to write checks on, they shouldn't be able to loan it out (which they currently do). With full reserve banking, the money supply is constant. Currently, it seems like we're getting something for nothing---we make illiquid loans with our money, yet can still use claims on those loans (checks) as an ultra-liquid money equivalent. Liquidity has been created out of thin air, and we all seemingly win in the short run---except that this is very inflationary. In a full reserve system, you could write checks on your fully backed checking accounts and this would be accepted as money, or you could theoretically write checks on your loan accounts but this would be very illiquid and would be the same as trying to pay with stocks or bonds. As it should be.
 * "...I think the point of full reserve is to separate loan [investment?] banking and deposit banking..."
 * So far so good, then it is a bit more complicated.
 * "Full reserve banking" is still a misnomer. Separating deposit banking from loan banking means that in "deposit banking" total deposits in an individual bank should be reduced by the amount of a loan advanced and not treated as an asset. That is, total deposits of lending bank(a) minus loan issued and total deposits of receiving banks(b,c,d,(or a)) plus the borrowed money. Janosabel (talk) 18:10, 19 October 2010 (UTC)

Inflation and full-reserve banking
I'm going to remove this paragraph:


 * Because fractional-reserve banking necessarily increases the money supply and causes monetary inflation, some economists (most notably the Austrian School) consider this aspect of fractional-reserve banking to have deleterious and destabilizing effects on the economy over time.

because the cited articles don't actually claim that full-reserve banking would do this. To the extent that they talk about controlling inflation they are talking about the gold standard - which is (partially) correct, although it is still wrong because a government can (and almost certainly will) still engage in debasement. Fractional reserve banking by itself does not cause secular inflation since (as any standard economics textbook will tell you, including the one by Krugman cited in this paragraph) it only multiplies the high powered money in the economy. Once that point is reached no further inflation occurs; if it does it's because the amount of high powered money in circulation has increased, not because of fractional-reserve banking. Equilibrium007 (talk) 05:57, 20 September 2010 (UTC)

Unbelievable omission
THIS ISSUE IS NOW RESOLVED Reissgo (talk) 15:56, 27 January 2011 (UTC)

The main article fails to explain what full reserve banking actually is! The phrase "time deposits" is not mentioned! When I tried to explain on the fractional reserve banking wiki page that a system of time deposits (and no demand deposits) was full reserve banking they did not believe me! And I couldn't give a reference to this page because this page doesn't say what full reserve banking is. Indeed to this day I have yet to find a reference that will pass the wikipedia standards of a reliable source that states what full reserve banking is. By the way, if anyone wants to suggest that an explanation is in some particular book - then please state which page. Currently on the fractional reserve banking page the authors think that under full reserve banking there can be no loans by banks. Let us please correct this stupidity with a good reference. Reissgo (talk) 10:18, 9 December 2010 (UTC)

P.S. I suspect there may be an explanation in "100% Money" by Irving Fisher, but I do not have a copy and it costs around $1000! Reissgo (talk) 10:22, 9 December 2010 (UTC)


 * Rather than an "unbelievable omission", one alternate possibility is that your understanding of the role of time deposits is flawed. From what I've seen, it's almost certainly not the former.  BigK HeX (talk) 08:54, 2 January 2011 (UTC)

Invalid criticism
The section starting "The most common criticism of full-reserve banking..." is a common fallacy as discussed by Fisher in "100% Money and The Public Debt" - http://www.downtr.net/285898-irving-fisher-100-money-and-the-public-debt.html

"Where then would a bank get any real revenue and how could it do any money lending? Almost everyone asks this question.

Yet there is not difficulty in answering it. In the first place, everyone who lends money (except the commercial banker) does so with pre-existing money and with money of his own creation. Even the investment banker lends only in that way-with pre-existing money. Clients who have given him money to invest cannot go on using it as their own money by drawing checks against it as though it were really 'on deposit' in a safe."

This demonstrates that you *can* make loans in a 100% reserve system. Check out the wording at the top of the article: "In other words, funds deposited are not lent out by the bank as long as the depositor retains the legal right to withdraw the funds." - that's correct. Under a 100% reserve system banks can not lend from demand deposits, but they can lend money from time deposits because the savers do not have the legal right to to their money until their notice periods are served. i.e. "Clients who have given him money to invest cannot go on using it as their own money". Reissgo (talk) 16:26, 31 December 2010 (UTC)


 * We've already been through this song-and-dance a number of times already, and I've offered various suggestions on possible resolutions. In any case, I'll just reiterate that your understanding of banking -- and especially of time deposits -- is deeply flawed, and I'll leave it at that. BigK HeX (talk) 08:51, 2 January 2011 (UTC)


 * You say "we've already"... but the Fisher reference is new, high quality evidence in my favour. You had already said in the past that you would accept any Fisher writings as a RS. You have yet to make any mention of it. Reissgo (talk) 10:27, 2 January 2011 (UTC)


 * It is strongly suggested in your first comment above that you are attempting to contort the Fisher source to say what you wish it said. "but they can lend money from time deposits because the savers do not have the legal right to to their money" is almost certainly a fabrication of YOUR own doing which has absolutely no basis in what you've mentioned of Fisher's source.  That you might have to invent such a claim would be pretty understandable, since time deposits have none of the significance that you persist in trying to assign them. It's very unclear why you show a fixation on time deposits and why you continue to err in attempting to tremendously exaggerate their role in the fractional and full reserve processes (even placing time deposits in a central role in the process).  I also can't figure out why you are expending effort on the full-reserve banking issue, when it seems like a pretty new topic to you, and one that you really don't seem to have grasped even the basics of.  I will again offer an invitation to visit my talk page, where it would be more appropriate to try and explore our understandings on this subject.
 * In the meantime, IMO, your attempts to delete cited information while pushing these odd viewpoints is terribly unproductive. I cannot support those efforts. BigK HeX (talk) 16:59, 2 January 2011 (UTC)


 * The relevant paragraph from the document "A Program for Monetary Reform" is this one:
 * "Under the present fractional reserve system, if any actual money is deposited in a checking account, the bank has the right to lend it out as belonging to the bank and not to the depositor. The legal title to the money rests, indeed, in the bank.  Under the 100% system, on the other hand, the depositor who had a checking account (i.e., a demand deposit) would own the money that he had on deposit in the bank; the bank would simply hold the money in trust for the depositor who had title to it.  As regards time or savings deposits, on the other hand, the situation would, under the 100% system, remain essentially as it is today.  Once a depositor had brought his money to the bank to be added to his time deposit or savings account, he could no longer use it as money.  It would now belong to the bank, which could lend it out as its own money, while the depositor would hold a claim against the bank.  The amount, in fact, ought no longer to be called a “deposit”.  Actually it would be a loan to the bank."
 * The authors envision a system where checking deposits are 100% backed. But where savings accounts and time deposits are converted to loans to the bank, which are not backed at all. These 'loans' would have no special claim beyond the claim of normal creditors of a bank. I'ld like to make two points: i) If this document is used as a source, the proposal in it should be accurately described. ii) What some economists proposed 70 years ago in the middle of the Great Depression should not be presented as a serious proposal by economists today. LK (talk) 10:57, 25 January 2011 (UTC)


 * Agree here. The source makes it clear that these are loans to the banks.  IMO, that is obviously the most accurate way to convey the concept to an article's reader. BigK HeX (talk) 14:00, 26 January 2011 (UTC)

"What some economists proposed 70 years ago in the middle of the Great Depression should not be presented as a serious proposal by economists today" - why on earth not? Especially if you replace the words "in the middle of the Great Depression" with "Shortly after a substantial stock market crash" then you can see we are living in very similar times. According to http://en.wikipedia.org/wiki/A_Program_for_Monetary_Reform, the document was written by some very heavyweight economists and approved of by a great many others. It is quite clear that this document should be taken seriously today. I also note that the governor of the bank of England quoted Fishers work only just recently. Maybe you should read this: http://www.amazon.co.uk/This-Time-Different-Centuries-Financial/dp/0691142165 Reissgo (talk) 12:35, 25 January 2011 (UTC)


 * If you would like to use the term "time deposit" in the article based on citing the Fischer article, kindly use the term "time deposit or savings account", as that is the term actually used by the article. LK (talk) 10:16, 27 January 2011 (UTC)


 * Deal! No problem whatsoever. I have seen the two expressions used interchangeably in many articles. Reissgo (talk) 15:46, 27 January 2011 (UTC)

The use of the term "Time deposits" with respect to "A Program for Monetary Reform"
--> This text was originally on my talk page, but thinking about it, should have appeared here. My fault. Reissgo (talk) 12:54, 25 January 2011 (UTC)

I see absolutely no reason to insist on misleading wording that is even described by YOUR source as such, much less any need for edit warring. Please refrain from abusing the revert function. You may have already exceeded the punishable threshold [ see: WP:3RR]. Thanks. BigK HeX (talk) 10:17, 25 January 2011 (UTC)


 * Consider this paragraph. "As regards time or savings deposits, on the other hand, the situation would, under the 100% system, remain essentially as it is today. Once a depositor had brought his money to the bank to be added to his time deposit or savings account, he could no longer us it as money. It would now belong to the bank, which could lend it out as its own money, while the depositor would hold a claim against the bank. The amount, in fact, ought no longer to be called a “deposit”. Actually it would be a loan to the bank."


 * The paragraph is analogous to the following: "As regards dialling a phone number, the word dialling ought not to be used any more. Actually it should be pressing because rotary phones are scarcely used any more".


 * If you read this "dialing" paragraph within a longer article, written by respected authors, on how the phone system worked, would you then edit all Wikipedia articles that used the phrase "dialling a number" and change them to "pressing a number"?


 * I actually agree that the phrase "time deposit" may indeed be a misnomer - but, for good or bad, that is how they are defined. How about we use the word "time deposit" but then add a sentence explaining how the authors considered it a misnomer.


 * If the authors of the article believed that the "investment" was actually not currently known as a "time deposit" at all, then they would not have started the paragraph with the words "As regards time or savings deposits...".


 * By the way, they *also* suggested that "demand deposits" were a misnomer - are you going to go through Wikipedia changing all uses of that too?


 * Just as a general note - please don't edit war folks. M'kay?  Use the talk page more, the revert button less.  If your change gets reverted, don't keep trying to shove it in the article.  It's not going to work.  Use the various steps in WP:DR - RFC, Mediation, the various noticeboards.  Ravensfire ( talk ) 14:55, 25 January 2011 (UTC)


 * That's a nice personal analogy and all, but it does nothing to address the issue at hand, which is that the very source you are drawing from states that using the term "deposits" is misleading. Nothing is gained by trying to confuse readers by using a term which YOUR SOURCE RECOMMENDS AGAINST.  Did I mention that the source is being used for guidance here? BigK HeX (talk) 07:22, 27 January 2011 (UTC)


 * A peanut is not a nut - Shall I start changing all uses of the word in Wikipedia to "Arachis hypogaea"? Clearly this would be daft. Just because a word is considered a misnomer does not mean that we should change it in Wikipedia. Wikipedia is supposed to reflect the standard uses of words, not invent new ones. I have no objection to a comment suggesting that the word is a misnomer. By the way, I note that the authors did not suggest an alternative phrase.


 * Quoting from the document: "But savings or time deposits would, as at present, normally be covered only fractionally by cash reserves. They represent time loans to the banks..." This sentence is saying "time deposits ARE loans to the bank". Note that it is not saying "Time deposits are one thing, loans to banks are another thing altogether which are not called time deposits". What they are saying is more like "time deposits ARE loans to the bank, but we wish the inventors of the financial dictionaries had used a different phrase in the first place." Unfortunately the dictionary has already been written, and this page is not the place to re-write it. Reissgo (talk) 09:09, 27 January 2011 (UTC)


 * "The amount, in fact, ought no longer to be called a “deposit”. Actually it would be a loan to the bank."
 * But, selectively quote from the source if you like. I am unpersuaded and my objection to confusing readers is unchanged --- especially not for the sake of any editor's odd fixation on time deposits. BigK HeX (talk) 09:28, 27 January 2011 (UTC)


 * In the end, the current version that I have supported draws directly from the source while NOT being misleading at all.
 * Your original version attempts to selectively draw from the source in a manner that would confuse readers, and furthermore is even described explicitly by your source as being misleading.
 * I don't think there's much doubt which route -- of the two -- is preferable. Of course, this is not to say that other approaches may not be even better.  But, for material in the lede area, we should strive to maintain a simplicity. BigK HeX (talk) 09:36, 27 January 2011 (UTC)


 * The authors say its a "misnomer" not "misleading". They use the word misnomer because they are already acknowledging that that is how "time deposits" are defined. If the type of transfer was simply not a time deposit at all then they would simply have invented a new phrase and not even mentioned "time deposit". But they are reluctantly acknowledging that it is too late. The dictionaries have been written.


 * I would like some opinion from some neutral editors here. Not BigK Hex or LK. Reissgo (talk) 10:05, 27 January 2011 (UTC)


 * Feel free to ask at WP:ECON or WP:FINANCE for other opinions. Or are you afraid that you are the only 'neutral' editor on Wikipedia? LK (talk) 10:26, 27 January 2011 (UTC)


 * I'm not claiming to be "neutral"... I'm biased toward my own opinion :-)... but I would suspect you and BKH to be biased against my opinion because you both have declared me to be an idiot in the past. Now that I have discovered more sources, it is becoming clear that I have been right all along on virtually everything I have ever said on economics, both on this page and others, and it is probably quite embarrassing for you both to concede this fact. I will take a look at the links you suggested. Reissgo (talk) 11:12, 27 January 2011 (UTC)
 * Well, if you consider the persistent contortion of concepts and misuse of sources as being "right all along", I probably couldn't argue that. However, even your latest source serves to confirm what I've already mentioned to you ... which is that these are not actually "deposits", but rather are "investments". BigK HeX (talk) 13:38, 27 January 2011 (UTC)

You accuse me of being selective and Wikipedia is supposed to give the consensus view. So please answer this question: What is the most common label given to the entity from which banks are allowed to make loans, in most proposals for 100% reserve systems? Please support your answer with some references. Reissgo (talk) 14:46, 27 January 2011 (UTC)

For the record: I noticed concession by LK in "Invalid criticism" section and have edited main page accordingly. Reissgo (talk) 16:34, 27 January 2011 (UTC)

Is there a need to use the phrase "full reserve equivalent of time deposits"?
First of all, given our recent problem of edit war-ing, I have consulted http://en.wikipedia.org/wiki/Wikipedia:BRD and understand that when a bold edit is made that turns out to be contentious, the thing to do is ONE revert and then resolve on the discussion page. The use of the phrase "time deposit or savings account" was agreed between LK and myself, so even if BKH does not like it, it is still two votes to one.

I object to the use of the brand new phrase "full reserve equivalent of time deposits" invented by BKH. The implication is that somehow the time deposits used in full reserve banking somehow do not fall within the existing definition of a time deposit as commonly used in the literature. I dispute this. Reissgo (talk) 21:23, 27 January 2011 (UTC)
 * Taken directly from YOUR source that the monies are loans. The necessary elaboration is precisely why this does not belong in the lede. BigK HeX (talk) 21:57, 27 January 2011 (UTC)

With regard the use of "though in a full reserve system these accounts would effectively represent loans made to the bank rather than mere deposits"... This is analogous to saying "Under a vegetarian diet a peanut is not actually a nut"... this looks stupid because a peanut is not a nut regardless of whether you are a vegetarian or not. Reissgo (talk) 21:34, 27 January 2011 (UTC)
 * Doesn't matter whether you dispute it when it is drawn directly from YOUR SOURCE which states it.
 * "The amount, in fact, ought no longer to be called a “deposit”. Actually it would be a loan to the bank." BigK HeX (talk) 21:56, 27 January 2011 (UTC)


 * The article is a little ambiguous on this point. It says "The term 'time deposits' is a misnomer" - note it does not say "the term 'time deposits' would become a misnomer".


 * I have read several different descriptions of full reserve banking none of which have made so many complaints about misnomers.


 * Many financial terms have rather broad definitions. For example "Current accounts" in the UK (where I'm from) have come to include all sorts of optional bells and whistles, some with interest some without - but they are still classed as current accounts. Lets us say we have two current accounts, with one of which the bank send a text message to warn you if you are near your overdraft limit and the other they don't. By your logic the one with the text message must no longer be called a current account, but be called a "bank-account-with-text-warning-message".


 * Please can you explain how the "time deposits" described in A_Program_for_Monetary_Reform do not fall within the scope of the existing definition of a "time deposit". Reissgo (talk) 07:47, 28 January 2011 (UTC)


 * I see that LK has re-inserted the term "full reserve equivalent of" in the main article without answering my last question here. If nobody answers this question within a reasonable time I will undo LK's edit. Reissgo (talk) 08:50, 31 January 2011 (UTC)


 * Under the current system, banks have to hold cash reserves against savings accounts and time deposits, and depositors have the full legal right to withdraw their funds on demand. Depositors also stand ahead of other creditors when a bank is wound down, and deposits are usually insured by some government institution. Currently, there is little difference between a checking account and a savings account (used an ATM before?). The full-reserve proposal envisions investment-type accounts where withdrawals and repayment are not guaranteed, which is why banks need not hold reserves against them. This is very different from what is the case today, and it would be misleading to not describe the differences. LK (talk) 09:24, 31 January 2011 (UTC)

The document "A_Program_for_Monetary_Reform" is not a document stating "This is what 100% reserve banking is", instead its "This is a prescription for we think the entirety of money and banking should work. It includes, as a constituent, 100% reserve banking." - I.e. the things described correspond to a superset of what is necessary for 100% reserve banking. I am concerned LK and BKH are assuming that some of the desired features in the document are an essential, defining part of what 100% reserve banking is, when they are not.

To help resolve future disputes, it would probably help enormously if anyone could locate one or more alternative high quality sources for the definition of 100% reserve banking.

Having said all that - the main article is now infinitely better than it was. It at long last states, at least roughly what 100% reserve banking is and it makes clear that banks can act as financial intermediaries in such a system. So I'm not going to fight to remove "full reserve equivalent of" for the moment. Reissgo (talk) 13:43, 31 January 2011 (UTC)

Isn't this about demand deposits?
I have no idea where this began but here is my $0.02.

This article is about how demand deposits are treated. In both full-reserve and fractional-reserve banking time deposits, CDs, savings accounts, mutual funds, money market accounts, bond funds, equities, whatever, are all treated the same. You can invest in all of them in either system.

The difference is about demand deposits. The question is the impact on an economy if it cannot reinvest money held in demand deposits. So why are we talking about other things? Equilibrium007 (talk) 04:39, 28 January 2011 (UTC)


 * For the past couple of months it seems there have been edits aimed at proclaiming The Truth about the wondrous powers of time deposits and their magical ability to remake the face of banking. Or something.
 * I disagree with unqualified usage of such terminology, since -- functioning explicitly as a loan -- the idea has significant differences from the common conception. This necessary elaboration makes it unwieldy for the lede, IMO. BigK HeX (talk) 07:31, 28 January 2011 (UTC)

ignored or dismissed by the mainstream
In the intro there is a statement "Proposals for the restoration of full-reserve banking have been made, but have generally been ignored or dismissed by mainstream economists, who believe that the costs and inconvenience of such a change would outweigh any benefits". The reference used to "support" this statement was that of a distinctly non-mainstream Austrian economist. I therefore removed the reference and added [citation needed]. Lawrencekhoo has now reinstated the reference with a note saying "White is not mainstream, but as a monetary economist, he is a reliable source on this issue". Surely this is simply illogical. Surely it would make more sense to have a mainstream reference for this claim. Reissgo (talk) 13:49, 27 April 2011 (UTC)


 * As a tenured professor of monetary economics at a large university, White is a reliable source on this issue, even if his Austrian school beliefs place him in the minority. (Unless you are arguing that Austrian school is fringe, and all Austrian school economists are unreliable sources, in which case I think many editors who edit at the Austrian school page will have a bone to pick with you.) Also, it is not appropriate to remove sources that are properly cited if one feels that they are unreliable, the proper thing to do is to tag the source as potentially unreliable on the issue. LK (talk) 14:22, 27 April 2011 (UTC)


 * I wasn't complaining about the reliability of the source - I was complaining about whether the source supported the claim made. The words "ignore" and "dismiss" do not appear anywhere in the paper. Dismiss is a strong word, its stronger than merely "disagrees with" - if wiki wants to use such a strong word then it had better be expressed pretty unambiguously in a RS. I actually do believe that the mainstream ignores or dismisses full reserve banking - but that's my own OR. Wikipedia is supposes to express the opinions of RS's. Reissgo (talk) 11:30, 28 April 2011 (UTC)


 * I have edited to what I believe is a correct summary of position of the paper. Do you seriously doubt that most economists do not support the imposition of full-reserve banking? LK (talk) 05:25, 11 May 2011 (UTC)


 * To extrapolate from a single Austrian economist's view to "most economists" is OR. IMHO most economists have not considered full reserve banking at all, and so have not expressed an opinion in any literature. Sadly there is unlikely to be a reference anywhere which says as much. So it is not something I could edit into wiki without breaking its policies. Reissgo (talk) 07:52, 11 May 2011 (UTC)


 * White may or may not be 'Austrian', but he is a chaired professor of monetary economics at a major public university. Unless you can find someone to contradict him, his opinion on this matter is reliable. Do you seriously doubt that most economists do not support the imposition of full reserve banking? If so, where are these presumed hordes of economists clamoring for 100% reserve regulation? Full reserve banking is not even in the index of most major macroeconomics textbooks, whereas fractional reserve banking is. LK (talk) 11:11, 11 May 2011 (UTC)


 * I think we can safely term BoE Governor Mervyn King as a "mainstream economist". From the article citation currently numbered as #16: King, Mervyn. Governor, Bank of England.  Banking: From Bagehot to Basel, and Back Again". The Second Bagehot Lecture Buttonwood Gathering, New York City, 25 October, 2010 http://www.bankofengland.co.uk/publications/speeches/2010/speech455.pdf. (top of p.17): "And eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not coexist with risky assets." Directly subsituting "full reserve banking" for "eliminating fractional reserve banking" preserves meaning 100%.  LK I'm noting you substituted the name "Mervyn King" with "some economists".  Given his employer and his job status, and therefore the weight he adds to the debate, as well as supporting the legitimacy of even having the debate, I assert the name "Mervyn King" should stay most stuck to the article.    —Preceding unsigned comment added by Ricksher (talk • contribs) 10:10, 20 May 2011 (UTC)

You appear to be arguing against yourself when you say "Full reserve banking is not even in the index of most major macroeconomics textbooks" - you are supporting my opinion that full reserve banking is ignored rather than disliked. Does White (or the other paper which I do not have access to) actually say that most economists dislike full reserve banking? I doubt it. Reissgo (talk) 11:59, 11 May 2011 (UTC)

I decided to pay for the JSTOR document. It says


 * Two years later, the group, now joined by John Commons and "in behalf of some 400 economists (85% of those expressing an opinion)," submitted to the president almost identically the same "Program."'

That's rather a long way from a claim that most economists are against the idea. I know that on page 716 it expresses some negative views of 100% reserves, but they are prefaced by the words "We briefly suggest the following partial review." There are no references given for the opinions in that section. It is likely that the number of economists involved in the government's rejection of 100% reserves was far fewer than those in support. All in all I would suggest that the JSTOR citation does not support your assertion in the wiki page. Reissgo (talk) 13:42, 11 May 2011 (UTC)


 * Read the conclusion where it states:

"The 100% reserve idea did not die with Fisher, ... But the Fisher campaign and its proximate impact has long been only a historical episode. Why did it fall short? We briefly suggest the following partial review.

... (Four arguments against 100% reserve proposal) ...

Fisher did not wholly ignore any of these questions. But his arguments were not sufficiently persuasive in the arena of "practical" proposals, ...."


 * In any case the White reference is good enough. Stop deleting the sentence or the cite. Remember WP:PARITY, if a paper by a tenured professor at the large public university is not good enough, the same standards should be imposed on the other statements and cites supporting them in this article. I doubt there will be much left. LK (talk) 02:38, 12 May 2011 (UTC)


 * Just found this quote in a paper by the famous Diamond-Dybvig of the Diamond–Dybvig model, probably the most influential pair of economists on the topic of bank runs and systemic crises:

"In conclusion, 100% reserve banking is a dangerous proposal that would do substantial damage to the economy by reducing the overall amount of liquidity. Furthermore, the proposal is likely to be ineffective in increasing stability since it will be impossible to control the institutions that will enter in the vacuum left when banks can no longer create liquidity. Fortunately, the political realities make it unlikely that this radical and imprudent proposal will be adopted."


 * I'm adding this to the article. Hopefully this will put to rest this sillyness about how Full-reserve is viewed by the community of economists. LK (talk) 08:58, 12 May 2011 (UTC)


 * Responding to 3O request. I can't speak for the direct quality of the references, but I feel like the line of the summary is reasonably supported by the references given.  Full reserve banking pretty reasonably qualifies for WP:FRINGE as a subject, so including a statement from a source that disagrees with it in the summary is pretty reasonable.  i kan reed (talk) 13:57, 12 May 2011 (UTC)


 * The current wording is "However, mainstream economists generally ignore or dismiss proposals for full-reserve banking, believing that the costs and inconvenience of a full-reserve banking system would outweigh any benefits.". This could be misinterpreted as "mainstream economists generally believe that the costs and inconvenience of a full-reserve banking system would outweigh any benefits." which is incorrect. I think The ignore and dismiss aspects should be clearly delineated by using two separate sentences. For example:


 * The ignore part: "Few economists have given any consideration to full reserve banking."


 * The dismiss part: "Some economists have suggested that the costs and inconvenience of a full-reserve banking system would outweigh any benefits."


 * To put it another way. There are presumably three categories of economist: A) ignore full reserves. B) Dismiss full reserves. C) Agree with full reserves. The percentages in the three categories must total 100. Maybe LK would like to suggest his estimate of the three percentages and make sure that the wording is in keeping with that. FWIW my suggestions for the three categories would be A) 98% B) 1% C) 1% (which would mean that 99% of economists were NOT dismissing full reserve banking). LK - please tell me your estimates.


 * Reissgo (talk) 16:20, 12 May 2011 (UTC)


 * I agree that most economist have likely not given it much thought. But that is not to say that they given it no thought whatsoever. Most macroeconomics textbooks start by looking at the case of full-reserve banking, and then move on to fractional reserve banking to emphasize the money multiplier effect of fractional reserves. If asked why not have full-reserve banking, most would likely say something about needing banks to function as financial intermediaries (the textbook reason for the existence of fractional reserve banking). When pushed on the issue, they would do a search, as I have done, and likely find the Diamond-Dybvig paper, and accept that as the reliable mainstream viewpoint on the issue.
 * This thought process is not unique to the issue of full reserve banking. Economists are specialists, we do not have a deeply thought-out opinion on every issue in economics. For example, when asked, "what is optimal tax policy?", an economist would likely say something about equating the marginal efficiency loss per dollar tax collected. If pushed, they would likely eventually dig up this seminal paper by Diamond and Mirrlees, and accept that (and the follow-up literature) as the mainstream viewpoint on the issue.
 * Take any particular issue, and only a very small fraction of economists have ever expressed an opinion about it. The mainstream viewpoint on any particular issue is the viewpoint of the 1% who have studied the issue and have published about it. LK (talk) 05:13, 13 May 2011 (UTC)


 * I know you've already got a third opinion, but I disagree with the one expressed above; one person's opinion, however prominent, is not an appropriate source for a statement of "most" or "mainstream." Plenty of people manage to become tenured professors in spite of wacky views, and we can't take the existence of tenure as mainstream endorsement of those views. (Note that I know nothing about full-reserve banking.) Roscelese (talk &sdot; contribs) 18:29, 12 May 2011 (UTC)


 * I'ld like to rebutt Roscelese's argument. Since full-reserve banking is not taken seriously by most of the economics profession, it is almost never addressed by the academic literature. Much of the writing done on this issue is by fringe proponents, who are not representitive of the majority of economists. However, when mainstream economists have addressed the issue, they have been negative about it. Note for example, the opinion of Diamond and Dybvig, likely the two foremost economists on the issue of bank runs and financial crisis. When looking in the academic literature, essentially all contemporary mainstream economists who have expressed an opinion on the issue of full-reserve banking have dismissed it, even proponents of full-reserve banking have noted that the economics profession has dismissed it. This essentially shows that the economics profession as a whole has dismissed the idea of full-reserve banking. LK (talk) 03:48, 13 May 2011 (UTC)


 * Also, Roscelese, Richard Sternberg was never tenured at any university, let alone a large public university. The tenure process is very stict, I tend to believe that only very few currently tenured professors at large public universities hold fringe views on the subject that they received tenure in. (I do however admit that some fomerly tenured professors do hold fringe views, usually in their dotage.) LK (talk) 05:27, 13 May 2011 (UTC)


 * You're right, of course (I went looking for professors with silly ideas and forgot I'd also said "tenured"). While "no one has written about it" is not generally a good argument to make, the best thing to do would be to find a source that says that mainstream economists generally reject this theory. Even if we add many references to the lead and add more criticism, we still name too many prominent proponents not to use a secondary source. Roscelese (talk &sdot; contribs) 06:09, 13 May 2011 (UTC)


 * I've been going about it wrong; searching for "full reserve banking" in the academic literature is nearly fruitless, as there are few mentions of this issue. However, full-reserve proposals may be better understood as proposals to outlaw fractional reserve banking, and there are many academic articles about the benefits of the modern system of fractional reserve banking. This survey article "Comtemporary Banking Theory", by Bhattacharya and Thakor, notes that "Given significant informational asymetries regarding borrowers, bank loans are special in that they signal quality in a way that other forms of credit do not." And, "Banks enchance aggregate investment and also improve its quality."
 * Economists view the modern system of banking much like the way electrical engineers view the use of electronic circuit breakers – it's a beneficial modern development. It may be relatively easy to find articles about the benefits of using electronic circuit breakers, but it would likely be quite difficult to find articles arguing against the outlawing of electronic circuit breakers. This however, does not mean that almost all electrical engineers would not view such a proposal with disdain. LK (talk) 08:44, 13 May 2011 (UTC)
 * Ref: Bhattacharya, Sudipto and Thakor, Anjan V., Contemporary Banking Theory. JOURNAL OF FINANCIAL INTERMEDIATION, Vol 3 No 1, 1994. Available at SSRN: http://ssrn.com/abstract=5670
 * Ref: Bhattacharya, Sudipto and Thakor, Anjan V., Contemporary Banking Theory. JOURNAL OF FINANCIAL INTERMEDIATION, Vol 3 No 1, 1994. Available at SSRN: http://ssrn.com/abstract=5670


 * LK, you wish to make an assertion about dismissing. You also wish to make an assertion about ignoring. If you put your two assertions in two separate sentences, then our dispute may disappear. How about it? Reissgo (talk) 08:42, 13 May 2011 (UTC)


 * Reissgo you are flogging a dead horse with this one. I think it would be better that this page is separated into two different wikis. one on full reserve/islamic banking and the other on 100% banking which seems a totally different animal. Andrewedwardjudd (talk) 13:58, 13 May 2011 (UTC)andrewedwardjudd


 * I'm not sure I understand what you mean. Why not just do it, and I'll tweak if neccesary. LK (talk) 08:44, 13 May 2011 (UTC)


 * I was hoping to get you to do it because I thought it would force you to realize that you can't simultaneously be ignoring something AND dismissing it. They are mutually exclusive. If you claim that most economists ignore full reserves than you can't go on to claim that most economists dismiss it. With regard the "ignoring" sentence then I guess you would want to say something like "Most economists have not given full-reserve banking any consideration"... but if you did that then what would you have in the sentence about dismissing?


 * If left entirely to me then the "ignoring" sentence would be, "Very few economist have studied full reserve banking in any detail". Unfortunately this is my own OR and so should not be in Wikipedia at all. I don't know of any source that says this explicitly. With regard the "dismissing" sentence... well I'd write "A very small number of economists have considered full reserve banking seriously. There have been some papers in support and some against. No consensus has emerged amongst academics" (Ok, so that's three sentences - but you know what I mean). Reissgo (talk) 09:10, 13 May 2011 (UTC)


 * Well, I would have to disagree. I think that most economists give little thought to it, but have a vague opinion that full-reserve banking is unworkable and would cause problems. They generally ignore the issue because it's never comes up in their professional life. Those who have faced the issue in their work generally dismiss proposals for full-reserve banking. I think the current sentence does a pretty good job of summarizing the situation.
 * I think it would be misleading to only say that most economists ignore the issue – implying ignorance of the subject. Specifically, per my electronic circuit breaker example above, I think it's incorrect to say that most economists have no opinion on this issue.
 * Also, it would be misleading to say that "No consensus has emerged amongst academics". Apart from Fisher (1930s) and Friedman (1960s), there has been little support for full-reserve banking. Friedman's proposal was debated but never found acceptence by the community of economists. There have been many papers bout the benefits of fractional reserve banking. Diamond-Dybvig are very influential, their opinion on this topic would likely dominate in the debate if there ever was a serious debate about this issue.
 * You can kinda see what economists think about full-reserve proposals by the dismissive way the idea of full-reserve banking is treated on blogs. Two examples, here and here. Unfortunatly they don't address the issue head-on, but it is indicative about my contention that economists generally dismiss full-reserve proposals.
 * However, this is just my opinion. I have been mistaken before, and may be mistaken about this. We should probably ask at the Econ project talkpage. LK (talk) 10:22, 13 May 2011 (UTC)


 * Ok, deal, I will bring it up. Reissgo (talk) 10:49, 13 May 2011 (UTC)

It doesn't look like we are getting any feedback there. In the mean time - please can you split your sentence into two. At the moment it reads like one of those sloppy journalistic reports like "100 people were killed or injured" - this leaves any intelligent viewer thinking - that's poor reporting - there is a massive difference between "99 killed 1 injured" and "1 killed 99 injured". Reissgo (talk) 11:52, 15 May 2011 (UTC)


 * Thank you for splitting the claim and removing the ambiguity. I am very skeptical that the references you give actually support the claims made. For example IIRC the White paper simply says that if full and fractional reserve systems exist simultaneously then the public will choose fractional reserves. But this is not the same as a claim that there is a net benefit... Lots of people choose to eat fatty foods - this does not show there is a net benefit to society of eating fatty food. I don't have the time right now to double check. I may return to this later. Reissgo (talk) 08:42, 17 May 2011 (UTC)


 * I would not read his paper as 'the public chooses fractional reserve, but it's bad for them, like fatty foods'. It's more like, 'full-reserve is unworkable and has never been workable, the market has long decided that the benefits of fractional reserve banking far outweighs the risks'. White is quite public about his opinion that a full-reserve system should not be imposed on the public, and that it would be, for various reasons, unworkable. The Diamond-Dybvig paper is also quite explicit about its opposition to full reserve proposals. And, as I mentioned above, the literature also has papers about the benefits of modern (i.e. fractional reserve) banking. Let's try to get someone from WP:ECON involved, if you disagree with my reading. LK (talk) 09:22, 17 May 2011 (UTC)


 * If full reserve banking was so conclusively derided by the mainstream then Mervyn King would not have said
 * "Another avenue of reform is some form of functional separation. The Volcker Rule is one example. Another, more fundamental, example would be to divorce the payment system from risky lending activity – that is to prevent fractional reserve banking (for example, as proposed by Fisher, 1936, Friedman, 1960, Tobin, 1987 and more recently by Kay, 2009)." in http://www.bankofengland.co.uk/publications/speeches/2010/speech455.pdf Reissgo (talk) 11:08, 21 May 2011 (UTC)


 * In his speech, King is reviewing proposals. He does not support full-reserve, in fact, at the end of his speech he states quite clearly that he supports increased capital requirements as a response to the financial crisis. The fact that King recognizes that a proposal for something like full-reserve has been made does not negate the fact that most economists do not supprt such proposals. LK (talk) 02:10, 23 May 2011 (UTC)


 * You said yourself that you might be wrong - and we still haven't managed to get any third opinion. Here's a new paper as evidence: http://people.bu.edu/kotlikof/newweb/The%20Financial%20Fix%204-15-09.pdf Reissgo (talk) 09:15, 23 May 2011 (UTC)


 * We have already had a 3O, he agreed with me. BigKHex is from WP:ECON, and he disagreed with your removal of the sentence about mainstream opinion from the lead. That's two. A second 3O raised objections that I replied to. He has not replied to my reply, which I take to show acceptence of (or at least, lack of objection to) my position. The paper that you link to above is by one of the few proponents for something like full-reserve banking. It's mentioned by Meryn King in his speech, and already refered to in the article; it does nothing to show that most economists do not support such a proposal. In fact, that they introduce such a proposal as essentially their own, and do not mention anyone else in support of their proposal, goes to show that such proposals do not have widespread acceptence. LK (talk) 09:59, 23 May 2011 (UTC)

Ok, I wasn't counting BigK for reasons I can't write here without breaking wiki policy. Reissgo (talk) 10:15, 23 May 2011 (UTC)

Referencing in the "criticism" section
The references for the first paragraph in the criticism section appear all at the end. Does that mean that all the references support the last sentence? - I don't believe they do. Surely the references should appear attached closely to the statements they support, not just grouped together at the end. Unless you want to claim that all the references support the first paragraph in its entirety - which I do not believe. Reissgo (talk) 21:58, 24 May 2011 (UTC)


 * Here's an idea. Don't base edits on what you are wildly guessing. BigK HeX (talk) 01:11, 26 May 2011 (UTC)


 * The paragraph makes about six or seven separate claims. Are you telling me that all the references support all the claims? Or all the references support the last sentence? Please don't walk away without answering this question as you have disruptively done so many times before. Reissgo (talk) 01:27, 26 May 2011 (UTC)


 * The paragraph as a whole is supported by the references provided. Do NOT remove properly referenced material which you have good reason to believe is properly referenced. I KNOW you know they are properly referenced, because we have been having this discussion for a while now. If you care so much about attaching the references to individual sentences, you are free to do so yourself.
 * You appear to be determined to remove anything negative from this article because you just don't like it. You are not acting neutrally, if you were, you would be also removing material that you support that does not meet your standards about sourcing. Partisan removal of material is NOT acceptable behavior. LK (talk) 07:10, 26 May 2011 (UTC)


 * By that logic, you may as well have all the references for the entire article at the very end - and leave the reader the job of attempting to work out which citation supports which claim. I notice your explanation is "The paragraph as a whole is supported by the references provided" - this is totally ambiguous. It goes against the wiki principle of verifiability. I note that you did not say, "everything in the paragraph is supported by all of the references". You could have, but you didn't. Reissgo (talk) 07:49, 26 May 2011 (UTC)


 * The sources can be appropriately distributed to the individual sentences in that paragraph. And yet you decided to remove the whole paragraph because of your objection to the spacing of the sources. Kindly apply your expert eye to the whole article in an even-handed way, removing those paragraphs that do not meet your standards. There are other parts of the article where the sourcing leaves much to be desired. LK (talk) 08:15, 26 May 2011 (UTC)

An interesting argument... its effectively saying "other bits of wikipedia are poor quality, so lets allow this bit to be poor quality too."...

The first sentence in the paragraph contradicts the second paragraph in the intro - so it needs extra careful backing up. Reissgo (talk) 08:29, 26 May 2011 (UTC)


 * I'm not talking about Wikipedia. I'm talking about your actions. It's not acceptable to impose a high standard, and then remove only the parts that you don't like that don't comply with your standards. Either act even-handedly or not at all. Partisan removal of material distorts an article, breaking WP:NPV. Such behavior is not acceptable for an experienced editor who should know better. LK (talk) 09:56, 26 May 2011 (UTC)


 * I have no idea where you are getting this line of argument from. Have I been allowing sloppy referencing elsewhere? If so where? I think I'm applying the same standards evenly. Just look at the referencing on other parts of the main page. Its mostly better than the "criticism" section. I notice you still haven't answered my question about which papers support which statements. How is anyone supposed to know? Reissgo (talk) 15:28, 26 May 2011 (UTC)


 * Have you been allowing sloppy referencing elsewhere? Yes. I will tag those sections that are sloppily referenced. Kindly do not selectively delete those sections that you don't like and leave those that you support.
 * Which papers support which statements - how is anyone supposed to know? You can read the articles and distribute the cites as appropriate, instead of deleting the entire paragraph. LK (talk) 09:43, 27 May 2011 (UTC)


 * "Have you been allowing sloppy referencing elsewhere? Yes." - Not really true. I have scarcely written any of the main article because you and BigK have been so determined to prevent me. Reissgo (talk) 16:22, 27 May 2011 (UTC)


 * You are being disingenuous. It doesn't matter which parts of the article you wrote. You have been selectively removing parts of the article that do not agree with your POV, letting stand less well referenced parts that you support. This type of behavior betrays a conflict of interest, and is not acceptable behaviour for experienced editors. If you wish to be an editor in good standing, edit neutrally or not at all. LK (talk) 00:05, 28 May 2011 (UTC)

full-reserve banking and a gold standard would not would eliminate the need for open market purchases
"Some supporters of full-reserve banking also support a gold standard. The combination of the two would eliminate the need for open market purchases and related policy tools, as the money supply size would then be fixed by the amount of the commodity; the value of money would also be tied to the value of one commodity. "

Full-reserve banking and a gold standard would neither "eliminate the need for open market purchases and related policy tools," nor fix "the money supply size ... by the amount of [gold]."

First, the amount of gold in vaults does not fix the money supply size under a bullion gold standard (see http://en.wikipedia.org/wiki/Gold_standard). Given wealth creation (via innovation), it is necessary to increase the money supply in a manner that holds the value of the currency to be constant.

Second, by keeping the value of the currency pegged to a fixed amount of bullion under a bullion gold standard interest rates and loan requirements (aka regulations) serves as "open market ... tools" to regulate the value of the currency. 71.213.49.150 (talk) 14:44, 4 December 2011 (UTC)WanniskiLewis 71.213.49.150 (talk) 14:43, 4 December 2011 (UTC)WanniskiLewis

What is meant by this sentence?
Ref: "A few proposals have been made where 100% reserve could be combined with investment accounts,..." what was the intent of the sentence and the succeeding paragraph? To me, it seems to be a non sequiter. The subject of the article is "100 per cent reserve banking". There is nothing about 100 percent reserve banking that even suggests anything at all about investment accounts: about people investing, or having the right to invest, or being forbidden to invest. The phrase "a few proposals have been made..." implies that there is something in these [unidentified] proposals that is relevant to the subject. But the logical connection to the subject isn't stated. If the paragraph is irrelevant, then I suggest it be eliminated. If there is some important idea to be communicated, then the paragraph should be rewritten. Mark.camp (talk) 23:41, 17 March 2012 (UTC)

How does it actually work?
I don't understand the article at all; it certainly isn't written for laymen. How does a bank make money for itself or its clients if it is holding, rather than investing, its money? The article needs to explain how full reserve banking actually works; trying to guess how it works based on the critisim section is ridiculous. 184.77.159.253 (talk) 03:04, 21 February 2011 (UTC)


 * I'd like to change the intro as follows:


 * Full-reserve banking, also known as 100% reserve banking, is a banking system comprising two types of account. One for storage of money needed for day to day spending and the other for the storage of longer term savings. The former is known as a demand deposit account and under full reserve banking this money can not be lent out by the bank. The latter is known as a savings account where by the saver agrees not to take out the money without serving some minimum term or notification period. This money is allowed to be loaned out by the bank during the period agreed by the saver.


 * Would that have been clearer? Reissgo (talk) 00:03, 22 February 2011 (UTC)


 * If you look in any textbook, the standard definition for Full-reserve banking is that banks keep all moneys deposited as reserves. The mention of proposed 'investment accounts' in the lead is already overweight. LK (talk) 07:20, 22 February 2011 (UTC)


 * The idea that Fisher, Milton Friedman and others, proposed a system in which banks could not make any loans is utterly idiotic. Reissgo (talk) 10:32, 22 February 2011 (UTC)


 * Agree with LK. Deposits are held in full, by the very definition of full-reserve.  Banks could theoretically still act as intermediaries, but those are investments akin to mutual funds, not deposits. BigK HeX (talk) 13:26, 22 February 2011 (UTC)


 * I was very careful not to use the word "deposit" (just for your sake) in my description. So you are arguing against something I didn't say. Reissgo (talk) 15:26, 22 February 2011 (UTC)


 * I noted my agreement with LK. You (wrongly) presume I was "arguing against" you.  BigK HeX (talk) 16:49, 22 February 2011 (UTC)

Touché. But what I would like to stress is that everyone that proposes a system of 100% reserve banking, also proposes a mechanism for banks to make loans (I challenge LK to find a single instance of someone proposing 100% reserve banking without a mechanism for banks making loans). A system of 100% reserve banking without a mechanism for banks to make loans is plain stupid and AFAIK supported by no one. Given this fact, it seems obvious that the fact that there is a mechanism for banks to make loans, should be stated in the lead and is not the slightest bit "overweight". Reissgo (talk) 20:53, 22 February 2011 (UTC)


 * Your assertion may (or may not) be overstated. There are certainly proposals about full-reserve banking that don't touch on investing, as the issue of investing is secondary, perhaps merely tangential to full-reserve banking.  Consumer deposit-taking institutions might forego investing and instead adopt a model of just charging customers for providing check-clearing services and safety-deposit services.  It is helpful, but, strictly speaking, there is no need for full-reserve proposals to speculate on whether institutions would replace lending with mutual-fund type models of investing. BigK HeX (talk) 23:11, 22 February 2011 (UTC)


 * "There are certainly proposals about full-reserve banking that don't touch on investing" - name one. Reissgo (talk) 00:29, 23 February 2011 (UTC)


 * Digital gold currency. BigK HeX (talk) 00:41, 23 February 2011 (UTC)


 * Your link does not constitute a "proposal about full-reserve banking". Reissgo (talk) 12:13, 23 February 2011 (UTC)


 * It's not a proposal. If you take them at their word, it's an actual 'full-reserve' banking system. These digital gold companies promote themselves as 'full-reserve' institutions. LK (talk) 05:15, 24 February 2011 (UTC)


 * Exactly. Its a minor detail. A tiny part of our financial system. A proper "proposal for 100% reserve banking" would be a proposal for how the whole monetary system would work. Proposals for 100% reserve banking have been written by Fisher, Friedman, assorted Austrians, the American monetary institute, PositiveMoney.org and others. AFAIK they all include the ability for banks to make loans. This is why I think it is important that the Wiki page on 100% reserve banking makes it clear that loans can be made in a 100% reserve system. Implying otherwise would be misleading. Reissgo (talk) 11:01, 24 February 2011 (UTC)

This part of the introduction makes no sense to me.

"Alternatively, a saver could entrust their money with a bank for investment in the full-reserve equivalent of time deposits or savings accounts, which in a full reserve system would represent loans made to the bank rather than deposits.[1]"

A deposit in a bank is by definition a loan to the bank, even though most people do not realise they are investors in a banks profit making operations.

Also the article is getting mixed up by the true nature of a fractional reserve bank. A fractional reserve bank does not have sufficient on hand liquid assets to enable customers who have lent money to the bank to be paid out in a timely manner unless a buyer can be found for the illiquid loan book or loans can be secured against the loan book.

The bank of amsterdam was a warehouse bank. You paid money to have your money stored at the bank. the warehouse bank that lends customers savings money on term deposit still has the same problems if the loans go bad because it is in fact operating with fractional reserve. The loans mean either deposits are created at the same bank or term savers money is no longer at the bank. Either way you get two claims on the same money. 1. by the saver and 2 by the money user. If the bank fails then somebody ends up with less money.

Andrewedwardjudd (talk) 19:11, 28 April 2011 (UTC)andrewedwardjudd


 * "If the bank fails then somebody ends up with less money."


 * Precisely. The person who agreed that her/his deposits be lent on by the bank in return for a share of the interest the borrower is charged.


 * The depositor who does not want the bank to take any risks with the money, would have to pay a storage charge. In case of failure of the banks lending operations, this money would still be there intact.


 * In fact, this is what the Independent Commission on Banking actually proposed: the separation of retail (high street) banking from from the riskier investment/speculative banking.


 * What needs to be emphasized for the sake of clarity is that the "risk bearing" depositor accounts would be reduced by the amount lent on to borrowers; thus no increase in the money supply. This is the meaning of the phrase "full reserve"---it applies to the aggregate money supply that does not change; and you do not "get two claims on the same money".
 * Janosabel (talk) 16:02, 29 June 2012 (UTC)

Recent reverted addition to lead
About this edit. It is inappropriate to add it to the lead for several reasons: --LK (talk) 14:44, 12 August 2012 (UTC)
 * 1) The lead summarizes the body, any issue that is not significantly discussed in the body shouldn't be in the lead.
 * 2) Even taken at face value, the claims do not refute the statement "full-reserve banking have received little mainstream attention or support." Being the subject of one paper by some people visiting at the IMF and the subject of one speech by a central bank chair is essentially "a little mainstream attention or support".
 * 3) The sources are not RS for the statements made. 1st source is a blog. 2nd source is a working paper by two people visiting the IMF and not reflecting the views of the IMF. It does not support "the IMF have indicated that it warrants serious consideration".
 * 4) Mainstream views on full reserve banking have remained essentially unchanged through the Global Financial Crisis. Essentially the Diamond–Dybvig view dominates. Any bank-like institution (takes deposits, makes loans) is open to bank runs. Diamond–Dybvig argued that full-reserve banking will prevent banks from acting like banks and, will drive banking activity into less well-regulated institutions, further endangering the financial system and the larger economy.


 * Ok, lets consider your points in turn.


 * 1. The exceptions to the "nobody pays attention to frb" are discussed in the body just as much as "nobody pays attention to frb".


 * 2. You are refuting something I am not claiming. I am merely claiming that there are notable recent exceptions to the rule.


 * 3. Both are RS. The first is actually the *letter* contained within the blog - not the blog itself. The letter is from Mervyn King himself. The *contents* of the second may not represent the views of the IMF, but the very fact that the IMF are funding this research is evidence that they are paying it attention. This is all I am claiming.


 * 4. This has no bearing on the validity of my edit.


 * Conclusion - All your arguments are invalid. Please now allow my edit.
 * Reissgo (talk) 12:41, 13 August 2012 (UTC)


 * You can't use a working paper by two people visiting an organization to argue that the organization is serious considering something. This violates OR and SYN. You need to have a source that says the same thing, LK (talk) 02:18, 15 August 2012 (UTC)


 * Also, this is WP:SYN. You need a RS that  argues that mainstream objections to FRB don't apply because FRB banks can use time deposits.  LK (talk) 02:50, 15 August 2012 (UTC)

Criticisms of full-reserve banking combined with a gold standard
I do not think this section is justified unless it specifies what "full-reserve banking combined with a gold standard" actually means and states who is proposing it. I made a list of all the proposals I could find for full reserve banking here and none of them involve gold. Reissgo (talk) 10:17, 14 August 2012 (UTC)

Diamond-Dybvig
My problem with this paper is not necessarily the main bulk of it but rather the specific claim "This would displace lending activity into unregulated institutions". Proposals for full reserve banking do not just say "lets ban making loans from demand deposits, leave the rest of the system unchanged, and see what happens". Instead they are proposals for an entire monetary and banking system. So the idea that the only people making loans in such a new system would be unregulated is nonsense. This is why I am requesting further evidence that this particular aspect of the paper is widely accepted. Reissgo (talk) 08:36, 29 August 2012 (UTC)


 * Wikipedia is supposed to report what the standard academic journals say on a subject, regardless of what we may think is true. In this case, the standard model is the Diamond Dybvig model, and Diamond Dybvig pretty clearly opposes imposing full-reserve banking as they argue this will displace banking activity into less well-regulated institutions. Even if you disagree with their view, you must realise why Wikipedia must report this view that is expresses in a widely influential paper on the topic. If there is widespread disagreement with this view (and I haven't seen any), you are welcome to cite such disagreement, and accord it appropriate weight.. LK (talk) 09:41, 29 August 2012 (UTC)

Links to article by Rothbard on FRB
Please look at these articles from Rothbard.
 * What Has Government Done to Our Money?
 * The Case for the 100% Gold Dollar
 * Taking Money Back

It's clear that he considers it 'fraud' when banks lend out monies entrusted to them. His problem is with the extension of credit by banks (bank lending), not with whether or not deposits are available on demand. He does not state in any of these screeds against fractional reserve banking the idea that "Oh, it's OK to have fractional reserve banking as long as the accounts are time deposits and not 'on-demand' accounts." --LK (talk) 11:06, 30 August 2012 (UTC)


 * Which of those is a proposal for full reserve banking? And does that proposal put a restriction of lending money stored in time deposits? Reissgo (talk) 12:39, 30 August 2012 (UTC)

Financial intermediation vs Maturity transformation
Financial intermediation is not maturity transformation. Financial intermediation can still occur with Full RB. References to the benefit of financial intermediation are like reference to the benefits of drinking milk. Irrelevant to this page. If people can find cites for the benefits of maturity transformation that would relevant. If no one does, I will.FRB123 (talk) 11:40, 12 October 2012 (UTC)


 * I dispute that full reserve banking prevents maturity transformation. If no reference can be found to support the claim, I will remove that section. Reissgo (talk) 13:13, 14 October 2012 (UTC)


 * Well, it depends. If term deposits were lent out for longer periods than they were deposited, that would be MT.  But then the question is whether Full RB would allow that.  Austrians would (probably) say no, as it would still increase fiduciary media (circulation credit).  But it's an interesting question.  This is a subtle nuance on Full RB I certainly hadn't thought about.  Anyone else have any ideas on term (or time) deposits?  Under a Rothbardian Full RB system would there (should there) be MT? Leaving the time deposit issue to one side, there is no question FullRB would limit MT so it definitely should be listed in the "case against" because it's the only real cost to FullRB.  And there have to be costs because it doesn't exist.  If there were no costs, FRB wouldn't have overtaken FullRB. - FRB123 (talk) 23:38, 14 October 2012 (UTC)


 * lending for longer terms than the time deposits will only increase the money supply if the bank fails to find new time deposits to replace the expiring ones. Reissgo (talk) 11:45, 15 October 2012 (UTC)


 * I thought we already had this discussion. How about using one-week time deposits to finance 30-years mortgages? What about time deposits that last 2 days. What if a 'full-reserve system' forbids lending from 'demand deposits', but banks started offering 1-day time deposits? How is that any different from a savings account? LK (talk) 07:39, 16 October 2012 (UTC)


 * I don't know the point you're making. Full RB either limits or eliminates MT.  Not FI.  FRB utilizes MT and FI.  FRB is the business of MT.  So at the very least it is undisputed that the key difference between Full and FRB is MT not FI.  That's all we are discussing.  Whether Full RB would allow some MT (7 day deposits lent out for 30 year mortgages) is a completely different hypothetical and given the world we're in is so off the planet of hypotheticals it's not worth discussing.  The chances of a Full RB system being implemented today is precisely zero.FRB123 (talk) 23:41, 17 October 2012 (UTC)

History section
Currently the history section only contains "For more details on this topic, see Fractional reserve banking#History".. but that link scarcely tells you anything about the history of full reserve banking. I propose that the link should be zapped, and replaced with a history of proposals for full reserve banking systems. Something like this (with proper references added of course):

1933 The Chicago plan 1935 Irving Fisher, "100% Money" 1939 A Program for Monetary Reform 1948 A Fiscal and Monetary Framework for Economic Stability - Milton Friedman 1960 A Program for Monetary Stability Milton Friedman 1987 James Tobin, "The Case for Preserving Regulatory Distinctions" 2000 Creating New Money New Economics Foundation 2009 The Reform of Banking Regulation John Kay 2010 National Emergency Employment Defense Act

What do you think? All those in favour please speak up. I don't want to add it without support, because I know some people will be hostile to the idea. Reissgo (talk) 22:26, 19 October 2013 (UTC)


 * Oppose - you'll need to find an WP:RS citation which summarizes the history in that way. We aren't allowed to cobble together our own narratives. SPECIFICO  talk  22:35, 19 October 2013 (UTC)


 * Oppose - This is a clear case of WP:OR. Please read up on this. MilesMoney (talk) 23:07, 19 October 2013 (UTC)


 * Ok, I take your points. How about if instead it was in a section headed "Some example proposals" or similar..? Reissgo (talk) 23:28, 19 October 2013 (UTC)

currently no full reserve banking system in existence
I removed the sentence saying "currently no full reserve banking system in existence" as it was not sourced. SPECIFICO then undid my edit claiming the statement was uncontroversial, and challenging me to find a counterexample... This is quite interesting because some time ago I wanted to explain that all proposals for full reserve banking systems allow money stored in time deposits to be lent out. I think its plain obvious and uncontroversial. But was not allowed, because I couldn't find a citation. At the time I challenged the editors to find a counterexample and they could not - but I was still not able to make my edit. If you want to have "currently no full reserve banking system in existence" because I can't find a counterexample then I should be allowed to have "all proposals for full reserve banking systems allow money stored in time deposits to be lent out" if you can't find a counterexample. Do we have a deal? Reissgo (talk) 23:19, 19 October 2013 (UTC)


 * You need to find a RS statement that the government of country X requires 100% reserves for all banks. SPECIFICO  talk  23:31, 19 October 2013 (UTC)


 * You appear to have ignored my discussion. You need to find a RS statement that says this proposal for full reserve banking does not permit lending of money stored in time deposits. Reissgo (talk) 23:34, 19 October 2013 (UTC)

Did Fisher support full reserve banking
It is my understanding that Irving Fisher did more than just "discuss" full reserve banking, as stated in the lede. The word discussed, could be misconstrued. Someone could discuss something they don't like. But Fisher wrote multiple documents over a period of years where he clearly supports full reserves. If there are no reasonable counter arguments I will change the word "discussed" to "proposed". Reissgo (talk) 19:32, 7 July 2014 (UTC)
 * Find secondary reliable sources for any broad characterization of Fisher's work. If this is a noteworthy fact, you should have no problem finding mainstream discussion of Fisher's "proposal" in academic and news publications.  SPECIFICO  talk  19:38, 7 July 2014 (UTC)
 * That was easy. The very first place I looked talked about the "1939 proposal — spearheaded by the famous economist Irving Fisher". So that is a citation for both the fact that it was a proposal, and there was more than one date. Reissgo (talk) 23:20, 7 July 2014 (UTC)

Proposals for full reserve banking systems
Proposals for reforming the banking system that incorporates some aspect of full reserve banking systems:


 * Irving Fisher, "100% Money"
 * Huerta de Soto, "Money, Bank Credit, and Economic Cycles"


 * A Program for Monetary Stability Milton Friedman


 * James Tobin, "The Case for Preserving Regulatory Distinctions"
 * Creating New Money New Economics Foundation
 * The Reform of Banking Regulation John Kay


 * We need secondary RS references as to significant views and proposals. This is a primary source list. SPECIFICO  talk  01:43, 6 May 2014 (UTC)


 * This is not so much a "list" as a random set of examples. It is not intended to be, or presented as, comprehensive. I don't believe that wikipedia insists that a small collection of examples needs to exist previously in a secondary source, so I am reverting your bold edit of the long standing text. Reissgo (talk) 08:08, 6 May 2014 (UTC)


 * A "random set of examples" is pretty much a textbook example of original research based on primary sources.Volunteer Marek (talk) 08:32, 7 May 2014 (UTC)


 * What about the set of links in "See also", who chose them? Isn't that a random set of links? Is there a RS source that has exactly that set of links? If not then perhaps you should delete that entire section as original research. Reissgo (talk) 18:03, 7 May 2014 (UTC)
 * Please read the applicable policy on 'see also' lists. SPECIFICO  talk  19:22, 7 May 2014 (UTC)
 * I can not find the "applicable policy on 'see also' lists" - can you tell me where it is? I presume you have already read it. Reissgo (talk) 07:09, 21 August 2014 (UTC)

The comments on this valuable list made me laugh--wikipedia ensures its irrelevance. Why are people like Paul Kurgman listed on the main page but the originators of these concepts not?????? Also, Frederick Soddy is not in the list above, which should be remedied. AT the moment, the main article is useless and extremely slanted. The bullet list on the talk page seeks to remedy that, but is being opposed for stupid reasons. How is it "original research" to cite someone's book? It would be original research to cite data tables and draw theoretical conclusions from them. The above is citing commentary. *sigh*  http://fullreservebanking.com/Irving%20Fisher%20and%20the%20100%20Percent%20Reserve%20Proposal.pdf

Current examples

 * Peter Schiff's Euro Pacific Bank claims to practice full reserve banking (http://europacbank.com/company/security/) "Euro Pacific Bank is a pioneer in transactional only banking. The bank maintains a 100% deposit ratio, makes no loans and does not engage in leverage or speculation with client assets. "
 * James Turk's GoldMoney claims to practice full reserve gold banking
 * — Preceding unsigned comment added by 92.56.105.219 (talk • contribs) 16:12, 12 September 2013‎ (UTC)


 * The link you've added does not work as a reference because of its' promotional nature. We need WP:SECONDARY sources. – S. Rich (talk) 17:21, 12 September 2013 (UTC)


 * AFAIK secondary sources may be preferable to primary ones, but primary ones are not barred altogether. Also note the claim being made is not that "full reserve banks are common", but merely "they exist". Reissgo (talk) 06:59, 29 September 2013 (UTC)


 * Bitreserve claims to practice full reserve banking and publish a real time audit of reserves and liabilities (https://bitreserve.org/en/status) — Preceding unsigned comment added by 92.56.105.219 (talk) 13:28, 2 March 2015 (UTC)

Bizarre OR claim
The claim that Euro Pacific or any individual bank operates "full reserve banking" needs to be verified by a secondary Reliable Source. I doubt that any such source exists. What would this mean? That Euro Pac holds customer deposits of fiat dollars safe in its deposit account at its conventional clearing bank? What backs those deposits? Does Euro Pacific bank hold paper banknotes in its vault? Does it process withdrawals by a Fedex shipment of banknotes to the customer? SPECIFICO talk  15:41, 4 March 2015 (UTC)

--All banks have a reserve ratio, core capital ratio, Tier 1 capital, etc... which are easily seen in their balance sheet and are normally confirmed by external auditors and regulators. Standards like Basel III impose minimum core capital ratios. Full reserve banking means having a reserve ratio of 100%. (Most European banks currently have reserve ratios of 3-5%)92.56.105.219 (talk) 11:00, 5 March 2015 (UTC)


 * Full-reserve banking is not currently legally enforced anywhere in the world, although a number of banks and financial institutions claim to practice it, including Euro Pacific Bank, GoldMoney , Bitreserve.

Dr. Musgrave's comment on this article
Dr. Musgrave has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Paragraph from article:

Monetary reforms that included full-reserve banking have been proposed in the past, notably in 1935 by a group of economists, including Irving Fisher, as a response to the Great Depression.[2][3] Currently, no country in the world requires full-reserve banking: banks operating under a full-reserve ratio generally do so by choice or by contract.

Comment by Ralph Musgrave:

Re the claim that “..no country in the world requires full-reserve banking..”, an exception to that is arguably that money market mutual funds in the US (MMMFs) are banks of a sort, and essentially they now have to obey the rules of full reserve. I .e. where an MMMF wants to promise depositors $X back for every $X deposited, that money can only be lodged at the Fed or put into an ultra safe investment, like short term US government debt. Reference / source:

“SEC Adopts Money Market Fund Reform Rules” (2014) Securities and Exchange Commission. https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542347679 __________

Paragraph from Wikipedia article:

Economist Milton Friedman at one time advocated a 100% reserve requirement for checking accounts,[4] and economist Laurence Kotlikoff has also called for an end to fractional-reserve banking.[5] Austrian School economist Murray Rothbard has written that reserves of less than 100% constitute fraud on the part of banks and should be illegal, and that full-reserve banking would eliminate the risk of bank runs.[6][7]

Comment by Ralph Musgrave.

Friedman set out his ideas on full reserve here: Friedman, Milton (1960). “A Program for Monetary Stability”. Fordham University Press. New York. ( See in particular Ch3 under the heading “How 100% reserves would work”.) ________

Paragraph from Wikepedia article:

Some economists have noted that because banks would not earn revenue from lending against demand deposits, depositors would have to pay fees for the services associated with checking accounts. This, it is felt, would probably be rejected by the public[8][9] although with central bank zero and negative interest rate policies, some writers have noted depositors are already experiencing paying to put their savings even in fractional reserve banks.[10] Economists Diamond and Dybvig have warned that under full-reserve banking, since banks would not be permitted to lend out funds deposited in demand accounts, this function could be expected to be taken over by unregulated institutions. Unregulated institutions (such as high-yield debt issuers) would take over the economically necessary role of financial intermediation and maturity transformation, therefore destabilizing the financial system and leading to more frequent financial crises.[11][12]

Comment by Ralph Musgrave.

The answer to that “unregulated institutions” point that would probably be given by Adair Turner (former head of the UK’s Financial Services Authority) is that the regulations governing industry X should apply to all organizations that are in the X business regardless of whether they openly admit to being in the X industry or not. In short, there is no obvious reason why shadow banks should be excused obeying bank regulations just because they call themselves “shadow banks”. As Adair Turner put it, “If it looks like a bank and quacks like a bank, it has got to be subject to bank-like safeguards.” Source:

Turner, Adair (2012). “FSB seeks to tame shadow banking” Financial Times. London. http://www.ft.com/cms/s/0/23eefd10-3175-11e2-b68b-00144feabdc0.html#axzz4BMZUd94s __________

Paragraph from Wikipedia article:

In the wake of the 2008 financial crisis, Martin Wolf, chief economist at the Financial times, endorsed full reserve banking, saying "it would bring huge advantages".[3] John H. Cochrane also has come out in favor of full reserve banking.[13] In a response in the New York Times, Paul Krugman stated that the idea was "certainly worth talking about", but worries that it would drive financial activity outside the banking system, into the less regulated shadow banking system.[14]

Comment by Ralph Musgrave.

There are many works on full reserve banking, or at least which are largely concerned with the arguments for and against full reserve. This is a list (certainly not a complete one) of works which argue for full reserve, against it, and which are relatively non committal.

Tobin, James (1987). “The Case  for  Preserving  Regulatory  Distinctions”. in Restructuring the Financial System,  Federal Reserve  Bank of Kansas City, 1987,  pp. 167-183. https://www.kansascityfed.org/publicat/sympos/1987/s87tobin.pdf

Phillips, Ronnie (1992) “Credit Markets and Narrow Banking”, working paper No. 77, Jerome Levy Economics Institute of Bard College. http://www.levyinstitute.org/pubs/wp77.pdf

Huber, Joseph & Robertson, James (2000). “Creating New Money” New Economics Foundation. London. http://www.jamesrobertson.com/book/creatingnewmoney.pdf

Werner, Richard, Ben Dyson, Tony Greenham & Josh Ryan-Collins (2011) “Towards a twenty-first century banking and monetary system” http://b.3cdn.net/nefoundation/3a4f0c195967cb202b_p2m6beqpy.pdf

Sawyer, Malcolm (2016). “Full Reserve Banking: More ‘Cranks’ Than ‘Brave Heretics’” Cambridge Journal of Economics. http://cje.oxfordjournals.org/content/early/2016/06/02/cje.bew016.short?rss=1

Klein, Matthew (2013). “The best way to save banking is to kill it”. Bloomberg. https://www.bloomberg.com/view/articles/2013-03-27/the-best-way-to-save-banking-is-to-kill-it

Ryan-Collins, Tony Greenham, Richard Werner & Andrew Jackson (2011). “Where Does Money Come From?”. London. New Economics Foundation.

Jackson, Andrew & Ben Dyson (2012). “Modernising Money”. London. Positive Money.

________________

Pro full reserve organizations.

At the time of writing (2016) there are organizations in many countries which campaign for full reserve banking, or something similar. For example:

Positive Money in the UK. http://positivemoney.org/

Monetative in Germany. http://www.monetative.de/

Vollgeld in Switzerland. http://www.vollgeld-initiative.ch/english/"

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Musgrave has published scholarly research which seems to be relevant to this Wikipedia article:


 * Reference : Musgrave, Ralph S., 2014. "The Solution is Full Reserve / 100% Reserve Banking," MPRA Paper 57955, University Library of Munich, Germany.

ExpertIdeasBot (talk) 18:35, 15 June 2016 (UTC)

Ralph Musgrave is unaffiliated with any tertiary or other institution, and has no published peer-reviewed papers. See his self registered repec page. He writes a blog pushing full reserve banking. His "MPRA Paper" is essentially self-published by uploading to an open access website. The site essentially accepts any paper as long as it is of an 'academic' nature, and fully downloadable. To put it bluntly, Musgrave is a fringe activist using Expertbot to give a veneer of credibility to his non-mainstream views. This is a case of ExpertIdeasBot abuse. LK (talk) 02:55, 16 June 2016 (UTC)

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Sources for Nakamoto's views on full-reserve banking
The phrase that Nakamoto embedded in the Bitcoin Genesis block can be found (i) in the source code for Bitcoin, and (ii) in the Bitcoin blockchain itself (with the latter being the more widely disseminated by virtue of being a distributed ledger). The source for this phrase having come from The Times on the same day as Bitcoin's release is, of course, The Times itself. Whether or not Nakaomoto was right to make an political/economic point in the Bitcoin blockchain is immaterial: what count is that wikipedia describes views that have been influential (as in the preceding sentences) without taking a POV itself.
 * Hello. In order to make that text part of this Wikipedia article, you would need to find an independent secondary source that directly supports the statement.  The times article does not mention bitcoin and it does not mention banking reserves.  The github link is not considered a "reliable source" for Wikipedia text. Please have a look at this link: WP:RS and this one WP:V.  Because the cited references do not fit these policies, you should remove the text and restore it only if you find sources that directly support it.  SPECIFICO  talk  20:28, 3 April 2017 (UTC)
 * Wikipedia guidelines state that “To ensure accuracy, the text of quoted material is best taken from (and cited to) the original source being quoted”, which is why the quotation from the genesis block, being itself an obliquely labelled quotation of something else, needs two citations. Each of the sentences in that paragraph does the same thing — reporting a named person's published opinion on the article's subject — and each sentence uses the same formula of stating where the opinion was published as per WP:SELFPUB or WP:RSOPINION. You are correct to point out that I had a fragile source (another wiki) as support for the main statement (now replaced by two durable citations); but your suggestion that the the source-code hyperlink is not a reliable source (N.B. two different meanings of the word “source” here) betrays misundestanding both of the reason for hyperlinking it and of the nature of the hyperlinked source-code repository. The hyperlinked source-code ties the quote to the name of quote's author (which the blockchain citation doesn't explicitly do), and it's reliable because of the large number of logged revisions made to the codebase by the repository's authorized users after Nakamoto's departure from that project (i.e. much more controlled and peer reviewed than any of the newspaper columns cited in previous sentences). Don't confuse the likes of Facebook and Twitter with a version control system that's central to the security of an asset class with an 18.7 billion dollar market cap. 62.253.25.110 (talk) 01:51, 4 April 2017 (UTC)
 * Please read the policy links I cited to you. There are certain policies on this site that we all must follow. Thanks. SPECIFICO  talk  02:06, 4 April 2017 (UTC)
 * You appear not to have read them yourself. I've quoted one of them above, but you're ignoring it. The sentences in the paragraph are all reports of published opinions, so you should be applying the same criteria to all of them, not just the ones that fit your preconceptions about the world. Some of your remarks betray a strong personal prejudice about matters peripheral to the subject of the article, but you really ned to put you personal prejudices aside, in favor of Wikipedia policies on how to report and attribute published views. 62.253.25.110 (talk) 12:39, 4 April 2017 (UTC). And the editor who deleted this sentence on the grounds that it's “trivia” is imposing a personal POV on readers. It is for the reader to decide which of the views in the article they agree or disagree with, not the editor. Some readers might feels that the Wolf, Cochrane and Krugman quotes are “trivia”, but those quotes are nonetheless out there in the world (self published in Mr Cochrane's case), just like the Nakamoto quote. There are several views reported in the article, and the existence of those views in the public domain is an objective reality, so the task of an encylopedia is to report their existence verifiably and impartially, with proper attribution of quotations (as provided) and, where possible, secondary sources (two provided) of the dissemination of the views. 62.253.25.110 (talk) 14:02, 4 April 2017 (UTC)
 * Look, setting aside the question of whether those words appear in bitcoin code, and whether those words refer to full reserve banking, the plain fact is that they are WP:TRIVIA, and including them here gives them undue weight. They should not be mentioned here unless and until third party reliable sources start talking about those words in connection with Full-Reserve Banking. LK (talk) 10:13, 12 April 2017 (UTC)
 * No amount of sophistry or cherry-picking of out-of-context policies will change that fact that the quoted third-party source contains the phrase “the failure of fractional reserve lending.” Your personal beliefs on the relative merits of fractional reserve versus full reserve banking are irrelevant to a wikipedia article, and you should not be promoting those beliefs through misuse of WP:TRIVIA et al. or by pretending that third-party sources don't exist.

You need to stop adding this little bit of nothing to the article. Add it to a bitcoin or related article if you think it's significant. It's not a significant factor in the topic of this article. SPECIFICO talk  18:34, 19 September 2017 (UTC)
 * You need to take your vandalism somewhere else. Each time you vandalize this article you use a different deceit to excuse yourself. You were claiming that the secondary source didn't exist (it was right in front on you on the page), and when challenged over that deceit, you reverted to your previous ploy of claiming that anything from outside your own cosy little world is "trivia" or a "little bit of nothing" and that Wikipedia readers must be denied access to it in order to satisfy your ego. The reality is that the difficulties encountered by fractional reserve banking have provoked a variety of reactions, and some of them are reported in the article (Wolf, Cochrane etc). One of those high-profile reactions (discussed by secondary sources, unlike Wolf's or Cochrane's) happens to clash with your prejudices, and your response is to censor it. If it belonged (as you disingenuously claim) in a bitcoin article, then the Wolf comment belongs in an article about pounds sterling and the Cochrane article belongs in a US dollar article, yet you're content to leave those in situ. This is an article about full-reserve banking, not specific asset-classes, and if you don't understand that you should leave it alone.62.30.229.198 (talk) 09:00, 20 September 2017 (UTC)

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