How to Avoid the Next Taxpayer Bailout of the Financial System: The Narrow Banking Proposal
As recovery from the present economic crisis begins, policymakers must address what reforms will be made in financial system in order to prevent the reoccurrence of a similar crisis in the future. What will Congress do in response? In terms of long-term financial reform, what is to be expected from Congress is passage of legislation that increases oversight and regulation by the federal financial regulatory agencies. The purpose of this policy brief is to explain and evaluate one proposal for reform of the financial system that would help mitigate the policy conundrum that often results from conflicting short-run and long-run policies. This proposal, known as 'narrow banking,' would separately regulate and supervise the role of banks in providing a safe and stable means of payment from the system of credit creation by financial institutions. The heart of the proposal is to make checkable deposits as safe a means of payment as currency presently issued by the Federal Reserve System, but without the need for the elaborate supervisory and regulatory structure required.
|Date of creation:||Aug 2009|
|Contact details of provider:|| Postal: Postal: Federal Hall, 30 N. 7th St., Room 318, Terre Haute IN 47809|
Web page: http://www.indstate.edu/business/NFI/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frederic S. Mishkin, 1999.
"Financial Consolidation: Dangers and Opportunities,"
NBER Working Papers
6655, National Bureau of Economic Research, Inc.
- S. Mishkin, Frederic, 1999. "Financial consolidation: Dangers and opportunities," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 675-691, February.
- Robert Litan & William Isaac & William Taylor, 1994. "Financial Regulation," NBER Chapters, in: American Economic Policy in the 1980s, pages 519-572 National Bureau of Economic Research, Inc.
- Padoa-Schioppa, Tommaso, 2004. "Regulating Finance: Balancing Freedom and Risk," OUP Catalogue, Oxford University Press, number 9780199270569.
- Ronnie J. Phillips, "undated". "Narrow Banking Reconsidered, The Functional Approach to Financial Reform," Economics Public Policy Brief Archive ppb_17, Levy Economics Institute.
- Kenneth Spong, 1993. "Narrow Banks: An Alternative Approach to Banking Reform," Economics Working Paper Archive wp_90, Levy Economics Institute.
- Ronnie Phillips, 1992. "The 'Chicago Plan' and New Deal Banking Reform," Economics Working Paper Archive wp_76, Levy Economics Institute.
When requesting a correction, please mention this item's handle: RePEc:nfi:nfipbs:2009-pb-05. 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: (Ray Thomas)
If references are entirely missing, you can add them using this form.