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Short Changing 100 Percent Reserves

  • The Quarterly Journal of Austrian Economics
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Tags Money and BanksMoney and Banking

07/30/2014Mark Thornton

Volume 13, Number 2; Summer 2010

 

Selgin (2009) offers a challenge to 100 percent reserve banking by noting that small change would be unprofitable with 100 percent reserve money. This minor challenge fails firstly because 100 percent reserve banking does not require 100 percent  reserve money, only market determined money. Small change is shown here to not be a problem in the free market. Evidence from Richard Cantillon (1730) suggests that in the absence of government coercion, small change was not a problem.

Cite This Article

Thornton, Mark. "Short Changing 100 Percent Reserves." The Quarterly Journal of Austrian Economics 13, No. 2 (Summer 2010): 95-103.

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