A recent blog by Frances Coppola describes full-reserve banking as ‘the largest bank bailout in history’. In the interests of mutual understanding and accuracy, the following clarification and response addresses a few points that are unclear. We accept culpability for potential confusion here - the submission to the Independent Commission on Banking, which Frances links to, is around 2 years old now, and we’ve advanced our thinking on the proposals since then. A lot of this latest work hasn’t been released yet, but will be in the forthcoming book Modernising Money.
‘Full-reserve banking’ is a proposal that can end the recession, reduce personal and national debt, reduce inequality, and ensure that toxic banks can be allowed to fail with no cost to the taxpayer.