Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Law
Safety First: The Deceptive Allure Of Full Reserve Banking, Morgan Ricks
Safety First: The Deceptive Allure Of Full Reserve Banking, Morgan Ricks
Vanderbilt Law School Faculty Publications
In Safe Banking, Professor Adam Levitin joins a venerable tradition in the money and banking literature. That tradition, called full reserve banking, has claimed a number of illustrious supporters over the years, including Professors Irving Fisher, Henry Simons, and Milton Friedman. The basic idea of full reserve banking is seductive in its simplicity: "banks" should own nothing but physical cash. Because a full reserve bank has no investments, it can suffer no investment losses. A run on such a bank would be harmless, because the bank would never fail to meet redemptions (barring any loss or theft of cash). The …