Freebankers Debate Baxendale Banking Reform Proposal
As a followup to my posts Jesús Huerta de Soto’s LSE Hayek Lecture on Banking Reform; UK Parliament Speech Invokes Mises Institute re Honest Money and Sound Banking and UK Proposal for Banking Reform: Fractional-Reserve Banking versus Deposits and Loan, and Jeff Tucker’s Yesterday was a Historic Day:
Pete Boettke has blogged about Baxendale’s banking reform proposal in A Correction to a Wrong Impression From My Earlier Post and @Steve Horwitz, Larry White and George Selgin: What is Wrong With This Proposal for Bank Reform?
Boettke rightly sees the Baxendale banking reform proposal as being primarily an honest banking proposal that is compatible with both 100% banking and even freebanking–if adequately disclosed. Some of the freebankers disagree with the disclosure and clarification requirements of the proposal. Take note of Baxendale’s proposal of a “closed end mutual structure … with a big sign saying ‘Fractional Reserve Accounts,’” as a way to implement fractional-reserve freebanking (FRFB) with full disclosure. As I noted here,
As I see it, the “closed end mutual structure” Baxendale discussed as a way to implement FRFB accounts with full disclosure would make the nature of such accounts clear. Mayhap some freebankers predict that shares held in such a vehicle could trade as money. I, personally, would love to see them free to try so that we could all witness that attempt.