May 31, 2011 Reading Time: < 1 minute

“Free bankers have been fighting a war on two fronts. On one they face champions of central banking and managed money. On the other they struggle against advocates of 100-percent reserve banking. Although the second front is a lot smaller than the first, it’s far from being unimportant, in part because the battle there is being fought against people who generally favor free markets, who might have been expected to join rather than to oppose our cause.

They oppose it for a variety of reasons, one of which is their belief that, in a truly free-market setting, fractional reserve banking wouldn’t survive. Instead, they insist, 100-percent reserve banks would prevail. That they haven’t is due, in their opinion, to a banking industry playing field slanted in favor of favor fractional-reserve banks, especially by either implicit or implicit deposit guarantees financed through forced levies upon all banks, and sometimes by taxation or inflation. In short, fractional-reserve banking has been nurtured by government subsidies.” Read more.

“The State and 100 Percent Reserve Banking”
George Selgin
Free Banking, May 31, 2011.
H/T to Steve Horwitz.

Image by Boaz Yiftach /

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