The Bundesbank paper notes the strain within the debate that is public you can find demands a 100 percent book system become imposed as an element of banking reform.
The claim is the fact that by restricting the credit creation capability of banking institutions (the reserve that is fractional noted above), the banking institutions will be more stable and there is less chance of crisis.
Therefore if banks needed to also have reserves equal with their loan book then security will be improved.
However the Bundesbank can be as on compared to that nonsense as MMT is.
It emphasises that banking institutions make loans which create deposits in reaction to demands from credit customers that are worthyborrowers). (more…)