It is only because of deposit insurance that fractional reserve banking is so prevalent. There is no incentive to choose a full reserve bank (the incentive has been removed) since a crash will be averted. Deposit insurance turns bank credit into money because it prevents a crash.
Bank credit is money because of deposit insurance. Deposit insurance is the reason banks can’t crash and bank credit is money.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment