Quarterly Journal of Austrian Economics

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100 Percent Reserve Banking and the Path to a Single-Country Gold Standard

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Tags Gold StandardInterventionismMoney and Banking

06/15/2016Hossein AskariNoureddine Krichene

Quarterly Journal of Austrian Economics 19, no. 1 (Spring 2016): 29–64

ABSTRACT: One hundred percent reserve banking is an essential foundation and prerequisite for a country to establish long-term financial stability and sustained economic growth. It is also an essential element for a country contemplating the adoption of a stable gold standard monetary system. Debt money, i.e., debt created by banks, was once called malum per se, a thing that is evil in its nature. It has supported excessive government debt, inflated speculative bubbles, fueled inflation, reduced investment and growth, and resulted in an unjust redistribution of wealth. In this paper, we discuss some of the detrimental consequences of fractional reserve banking and outline its abolition as the principal reform before one or more countries can establish a viable gold standard.

KEYWORDS: fractional reserve banking, financial repression, gold standard, inflation, money
JEL CLASSIFICATION: E00, E4, E52, F33, G01, G21

Cite This Article

Askari, Hossein, and Noureddine Krichene, "100 Percent Reserve Banking and the Path to a Single-Country Gold Standard," Quarterly Journal of Austrian Economics 19, no. 1 (Spring 2016): 29–64

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