The fractional reserve Banking diagram
DOI:
https://doi.org/10.52195/pm.v12i2.137Abstract
Fractional reserve banking systems are inherently unstable. Fractional reserve banks create three types of risks when they make loans: liquidity risk, interest rate risk, and default risk. These risks interact to make fractional reserve banking systems unstable and prone to failure. This paper derives the Fraction al Reserve Banking Diagram. The diagram is used to illustrate liquidity risk, in terest rate risk, and default risk. Finally, the diagram is used to compare central banking, free banking, and 100 percent reserve banking.
Keywords: Fractional Reserve Banking, Central Banking, Free Banking, 100% Reserve Banking, Banking Panics
JEL Codes: E32, E43, E50, E52, E58, G21
Resumen: El sistema bancario de reserva fraccionaria es inherentemente ines table. Los bancos de reserva fraccionaria crean tres tipos de riesgos cuando conceden préstamos: riesgo de liquidez, riesgo de tipo de interés y riesgo de impago. Estos riesgos interactúan para hacer de la banca de reserva fraccio naria inestable y propensa a la quiebra. Este trabajo deriva el Diagrama de Banca de Reserva Fracciona. Este diagrama se utiliza para ilustrar el riesgo de liquidez, el riesgo de tipo de interés y riesgo de impago. Finalmente, se utiliza para comparar la banca central, el sistema de banca libre y la banca con co eficiente de reserva del 100%.
Palabras clave: Banca de reserva fraccionaria, Banca Central, banca libre, banca con coeficiente de reserva del 100%, pánicos bancarios.
Clasificación JEL: E32, E43, E50, E52, E58, G21
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