Narrow Banking – Banking System Without Private Issuance of Credit Money as a Solution for More Resistant Banks and More Stable Financial System / Usko Bankarstvo - Bankarski Sistem Bez Privatne Emisije Kreditnog Novca Kao Rešenje za Otpornije Banke i Stabilniji Finansijski Sistem

• Autorzy: Jelena Radojičić , Predrag Radovanović
• Języki publikacji: EN

Abstrakty

EN

The global financial crisis has revived interest in the introduction of the “narrow banking”, which has become a topical issue in both political and academic circles. There are attitudes that banks have maximized yields by excessive credit expansion, while the losses associated with the excessive risks undertaken in pre-crisis period fell at the expense of taxpayers. Based on the idea that modern financial systems have structural problems whose solution requires fundamental reform, a new wave of regulatory proposals is launched for solving the problems. They are generally aimed to eliminate the banks’ ability to issue credit money that enjoys both implicit and explicit government guarantees. The concept of narrow banking, as one of the variants of full-reserve banking, provides ex-ante a level of bank deposits’ protection which is the same as the level of central bank’s money protection. Motives for the application of this concept are the following: to make banks more resistant to bank runs; to avoid creating a speculative “bubbles”; and to make the financial system more stable. The paper gives an overview of historical and new proposals of narrow banking. In addition, the concept of narrow banking is analyzed from the point of view of its basic characteristics and objectives, followed by a discussion on the problems and possible success of its implementation.

Słowa kluczowe

EN

credit money; moral hazard; financial crisis; narrow banking; financial stability

• Wydawca: Sciendo
• Czasopismo: Economic Themes
• Rocznik: 2015
• Tom: 53
• Numer: 3
• Strony: 376-397

Daty

wydano

2015-09-01

otrzymano

2005-07-16

zaakceptowano

2015-09-24

online

2016-04-15

Twórcy

autor

Jelena Radojičić

• University of Niš, Faculty of Economics, Serbia,

autor

Predrag Radovanović

• High Business School, Leskovac, Serbia,

Bibliografia

• BCBS (2010) „Basel III: A global regulatory framework for more resilient banks and banking systems", Basel: Bank for International Settlements.
• Boot, A. W. and Greembaum, S. (1992) „Bank Regulation, Reputation and Rents: Theory and Policy Implications", in C. Mayer and X. Vives (eds.), Capital Markets and Financial Intermediation. Cambridge, UK: Cambridge University Press, pp. 262-285.
• Bossone, B. (2002) “Should Banks Be ‘Narrowed’?, An Evaluation of a Plan to Reduce Financial Instability”, Public Policy Brief , No. 69, The Jerome Levy Economics Institute of Bard College, Hudson, NY, July.
• Bryan. L. (1991), Core Banking, The McKinsey Quarterly, 1: 61-74.
• Cochran, J. P., Call, S. T. and Glahe, F.R. (1999) Credit creation or financial intermediation?: Fractional-reserve banking in a growing economy, The Quarterly Journal of Austrian Economics, 2 (3): 53-64.
• Cochrane, J. H. (2014) Toward a Run-Free Financial System, in Martin Neil Baily and John B. Taylor (eds.), Across the Great Divide: New Perspectives on the Financial Crisis, Stanford, California: Hoover Press, pp. 198-249.
• De Soto, J. H. (1998) 2006, Money, Bank Credit, and Economic Cycles, (trans.) M. A. Stroup, Auburn, AL: Ludwig von Mises Institut.
• Deane, M. and Pringle, R. (1994) The Central Banks, New York: Viking Penguin
• Demirgüç-Kunt, A. and Huizinga, H. (2004) Market discipline and deposit insurance, Journal of Monetary Economics, 51(2): 375-399.
• Demirgüç-Kunt, A. and Kane, E. J. (2002) Deposit Insurance around the Globe: Where Does It Work?, The Journal of Economic Perspectives, 16 (2): 175-195.[Crossref]
• Diamond, D. W. and Dybvig, P. H. (1983) Bank runs, deposit insurance, and liquidity, The journal of political economy, 91(3): 401-419.
• Dixhoorn, C. van (2013) Full Reserve Banking An Analysis of Four Monetary Reform Plans, Utrecht: Sustainable Finance Lab.
• Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) https://www.sec.gov/about/laws/wallstreetreform-cpa.pdf. Accessed 05.05.2015.
• Dowd, K. (2009) Moral hazard and the financial crisis, Cato Journal, 29 (1): 141-166.
• Dyson, B. and Jackson, A. (2012) Modernizing Money, London: Positive Money.
• Ely, B. (1991) The Narrow Bank: A Flawed Response to the Failings of Federal Deposit Insurance, Regulation, 14 (2): 44-52.
• Ely, B. (1993) Savings and Loan Crisis, Fortune Encyclopedia of Economics, New York: Time Warner.
• England, C. (1997) The Future of Currency Competition, in J. A. Dorn. (book auth.) The Future of Money in the Information Age, Washington D. C.: CATO Institute.
• FDIC, https://www2.fdic.gov/hsob/HSOBSummaryRpt.asp?BegYear=1934& EndYear= 2015&State= 1&Header=0. Accessed: 15.05.2015.
• Fisher, I. (1935) 100% Money, New York: Adelphi Company.
• Fisher, I. (1936) 2009, 100% Money and the Public Debt. Pakthongchai, Thailand: ThaiSunset Publication
• Guttmann, R. (2003) Cybercash: The Coming Era of Electronic Money, New York: Palgrave.
• Kay, J. (2009) Narrow Banking: the Reform of Banking Regulation, London: Centre for the Study of Financial Innovation (CSFI).
• Kay, J. (2010) Should we have "narrow banking"?, in Layard, R (ed.) The Future of Finance, London: The London School of Economics and Political Science, pp. 208-226.
• Keynes, J. M. (1936) The General Theory of Employment, Interest and Money, London: MacMillan.
• Kobayakawa, S. and H. Nakamura (2000) A Theoretical Analysis of Narrow Banking Proposals, Monetary and Economic Studies (Bank of Japan), 18 (1): 105-118.
• Kotlikoff, L. J. (2010) Jimmy Stewart is Dead: Ending the World's Ongoing Financial Plague with Limited Purpose Banking, Hoboken, N.J.: John Wiley & Sons.
• Krstić, B. (2003) Bankarstvo, Niš: Ekonomski fakultet Univerziteta u Nišu.
• Kumhof, M. and Benes, J. (2012) “The Chicago Plan Revisited“, IMF Working Paper, No. 12/202, International Monetary Fund, Washington, August.
• Lainà, P. (2015) Proposals for Full-Reserve Banking: A Historical Survey from David Ricardo to Martin Wolf, paper presented at World Politics Post-Graduate Seminar, Helsinki, 5 February, http://etdiscussion.worldeconomicsassociation.org/wpcontent/uploads/Laina-30-march-15.pdf. Accessed: 15.05.2015.
• Litan, R. E. (1987) What Should Banks Do?, Washington, DC: The Brookings Institution.
• Minsky, H.(1982) Can ’It’ Happen Again? Armonk, New York : M. E. Sharpe.
• Mises, L. von (1941) 1998, Interventionism: An Economic Analysis (edited by B.B. Greaves), Irvington-on-Hudson, N.Y.: Foundation for Economic Education.
• Mishkin, F. S. (2004) The Economics of Money, Banking, and Financial Markets, New York: Pearson-Addison Wesley.
• Musgrave, R.S. (2014) The Solution is Full Reserve / 100% Reserve Banking, MPRA Paper, No. 57955, University Library of Munich, Germany, August.
• Phillips, R. (1994) The Chicago Plan & New Deal Banking Reform, Armonk, NY: M.E. Sharpe.
• Phillips, R. J. and Roselli, A. (2011). How to Avoid the Next Taxpayer Bailout of the Financial System: the Narrow Banking Proposal, in J. A. Tatom (Ed.), Financial Market Regulation: Legislation and Implications, New York: Springer Publishing, pp. 149-161.
• Pierce, J. L. (1991) The future of banking, New Haven, CT: Yale University Press.
• Spong, K. (1996) Narrow Banks: An Alternative Approach to Banking Reform, in D. B. Papadimtriou (ed), Stability in the Financial System, New York: St. Martin’s Press.
• Wilmarth, Jr. A. E (2012) Narrow Banking: An Overdue Reform That Could Solve the Too-Big-To-Fail Problem and Align US and UK Financial Regulation of Financial Conglomerates (Part 1), Banking & Financial Services Policy Report , 31 (3): 1-24

Identyfikatory

DOI

10.1515/ethemes-2015-0022