2 ms·

Any references to narrow banking been tried and "not working"? Separating the issue of private money from providing commercial credit risk insurance (ala CDS)

• astrange 3y ago
  The Fed won't give you a license to operate a narrow bank. It's been tried; they said it would make private banks insufficiently capitalized.
  • immibis 3y ago
    It should be unconstitutional for them to prohibit that.
    • astrange 3y ago
      You'd be fine with a regular law. But like I said, it would affect money supply greatly (ceteris paribus) so there's a lot of consequences to work out.
      • immibis 3y ago
        Free countries start from the presumption that everything not forbidden is allowed. It would affect the money supply greatly, but there was a time when every bank was a narrow bank, so isn't it really the fractional reserve banks who came along and affected the money supply greatly? I'm not saying narrow banks are worthwhile, but it's utterly insane that it's illegal for a bank to simply hold $100 bills in a bank vault on your behalf. It's utterly insane that banks are not just permitted, but legally required to lend out your money. And there's a minimum amount, too, because a bank that lends out $1 of each customer's money won't get a license.