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100 percent reserve banking: A critical review of green perspectives

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  • Dittmer, Kristofer

Abstract

100 percent reserve banking (C-PeRB) is an enduring proposal for monetary reform that has been taken up by some ecological economists. This paper identifies three groups of green arguments in favor of C-PeRB, and offers some criticism. First, the proposal could serve to constrain new investments by the availability of savings, thereby checking economic growth. However, this would strongly increase interest rate volatility. Second, it could potentially elevate environmental considerations in decisions about resource allocation by increasing the role of the democratic state as an economic actor. This line of argument faces problems that require further detailed exploration and historical perspective. Third, a transition to C-PeRB would allow debt levels to be drastically cut. This is technically possible, but politically a tall order. Whether the existing system of ‘debt-based’ bank money generates a significant growth imperative is unclear, and the importance of other driving forces behind perennial economic growth in modern societies – which C-PeRB does not address – remains an issue of contention. In general, the adoption of C-PeRB presupposes a tremendous reconfiguration of power relations between states and finance capital.

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  • Dittmer, Kristofer, 2015. "100 percent reserve banking: A critical review of green perspectives," Ecological Economics, Elsevier, vol. 109(C), pages 9-16.
    • Handle: RePEc:eee:ecolec:v:109:y:2015:i:c:p:9-16
    DOI: 10.1016/j.ecolecon.2014.11.006
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    8. Saeed Nosratabadi & Gergo Pinter & Amir Mosavi & Sandor Semperger, 2020. "Sustainable Banking; Evaluation of the European Business Models," Papers 2003.13423, arXiv.org.
    9. Tim Jackson & Peter Victor & Ali Asjad Naqvi, 2016. "Towards a Stock-Flow Consistent Ecological Macroeconomics. WWWforEurope Working Paper No. 114," WIFO Studies, WIFO, number 58788, February.
    10. Stein, Julian Alexander Cornelius & Braun, Dieter, 2019. "Stability of a time-homogeneous system of money and antimoney in an agent-based random economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 520(C), pages 232-249.
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