IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v109y2015icp9-16.html
   My bibliography  Save this article

100 percent reserve banking: A critical review of green perspectives

Author

Listed:
  • 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.

Suggested Citation

  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800914003395
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jan Kregel, 2012. "Minsky and the Narrow Banking Proposal: No Solution for Financial Reform," Economics Public Policy Brief Archive ppb_125, Levy Economics Institute.
    2. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    3. Mathias Binswanger, 2009. "Is there a growth imperative in capitalist economies? a circular flow perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 31(4), pages 707-727, July.
    4. Daly, Herman E., 1992. "Allocation, distribution, and scale: towards an economics that is efficient, just, and sustainable," Ecological Economics, Elsevier, vol. 6(3), pages 185-193, December.
    5. Anat Admati & Martin Hellwig, 2013. "The Bankers' New Clothes: What's Wrong with Banking and What to Do about It," Economics Books, Princeton University Press, edition 1, number 9929.
    6. Ronnie J. Phillips, 1994. "An end to private banking: early New Deal proposals to alter the role of the federal government in credit allocation," Proceedings, Federal Reserve Bank of Cleveland, pages 552-571.
    7. Loehr, Dirk, 2012. "The euthanasia of the rentier — A way toward a steady-state economy?," Ecological Economics, Elsevier, vol. 84(C), pages 232-239.
    8. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    9. Blauwhof, Frederik Berend, 2012. "Overcoming accumulation: Is a capitalist steady-state economy possible?," Ecological Economics, Elsevier, vol. 84(C), pages 254-261.
    10. Herman E. Daly, 1980. "The Economic Thought of Frederick Soddy," History of Political Economy, Duke University Press, vol. 12(4), pages 469-488, Winter.
    11. Allen, William R, 1993. "Irving Fisher and the 100 Percent Reserve Proposal," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 703-717, October.
    12. Joshua Farley & Matthew Burke & Gary Flomenhoft & Brian Kelly & D. Forrest Murray & Stephen Posner & Matthew Putnam & Adam Scanlan & Aaron Witham, 2013. "Monetary and Fiscal Policies for a Finite Planet," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 1-25, June.
    13. David H. Romer, 2000. "Keynesian Macroeconomics without the LM Curve," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 149-169, Spring.
    14. Laidler, David, 1993. "Hawtrey, Harvard, and the Origins of the Chicago Tradition," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1068-1103, December.
    15. Lawn, Philip, 2010. "Facilitating the transition to a steady-state economy: Some macroeconomic fundamentals," Ecological Economics, Elsevier, vol. 69(5), pages 931-936, March.
    16. Richard Werner, 2002. "A Reconsideration of the Rationale for Bank-Centered Economic Systems and the Effectiveness of Directed Credit Policies in the Light of Japanese Evidence," Japanese Economy, Taylor & Francis Journals, vol. 30(3), pages 3-45.
    17. Douthwaite, Richard, 2012. "Degrowth and the supply of money in an energy-scarce world," Ecological Economics, Elsevier, vol. 84(C), pages 187-193.
    18. Ingham, Geoffrey, 2004. "The nature of money," economic sociology_the european electronic newsletter, Max Planck Institute for the Study of Societies, vol. 5(2), pages 18-28.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Rezai, Armon & Stagl, Sigrid, 2016. "Ecological Macreconomics: Introduction and Review," Ecological Economic Papers 9, WU Vienna University of Economics and Business.
    3. 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.
    4. Jackson, Tim & Victor, Peter A., 2015. "Does credit create a ‘growth imperative’? A quasi-stationary economy with interest-bearing debt," Ecological Economics, Elsevier, vol. 120(C), pages 32-48.
    5. Scheidel, Arnim & Farrell, Katharine N., 2015. "Small-scale cooperative banking and the production of capital: Reflecting on the role of institutional agreements in supporting rural livelihood in Kampot, Cambodia," Ecological Economics, Elsevier, vol. 119(C), pages 230-240.
    6. Richters, Oliver & Siemoneit, Andreas, 2016. "Consistency and stability analysis of models of a monetary growth imperative," VÖÖ Discussion Papers 1/2016, Vereinigung für Ökologische Ökonomie e.V. (VÖÖ).
    7. Richters, Oliver & Siemoneit, Andreas, 2017. "Consistency and stability analysis of models of a monetary growth imperative," Ecological Economics, Elsevier, vol. 136(C), pages 114-125.
    8. Lee, Kang-Soek & Werner, Richard A., 2018. "Reconsidering Monetary Policy: An Empirical Examination of the Relationship Between Interest Rates and Nominal GDP Growth in the U.S., U.K., Germany and Japan," Ecological Economics, Elsevier, vol. 146(C), pages 26-34.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:109:y:2015:i:c:p:9-16. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.