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Safety First: The Deceptive Allure of Full Reserve Banking

dc.contributor.authorRicks, Morgan
dc.identifier.citationUniv. Chi. L. Rev. 113 (2016)en_US
dc.descriptionarticle published in a law review.en_US
dc.description.abstractIn 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 process of bank money creation, familiar to any student of Economics 101, would go away. Money creation would be exclusively a govern­ment affair; "banks" would be pass-through vehicles, true deposi­tories of currency. Our elaborate system of prudential bank regu­lation and supervision would be needless.en_US
dc.format.extent1 PDF (12 pages)en_US
dc.publisherUniversity of Chicago Law Review Onlineen_US
dc.subjectfull reserve banking, depositories of currency, regulatory arbitrage, entry restriction lawsen_US
dc.subject.lcshbanking lawen_US
dc.subject.lcshfinance - law and legislationen_US
dc.titleSafety First: The Deceptive Allure of Full Reserve Bankingen_US

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