Kuzman Iliev
The School of Free Banking with Fractional Reserves versus The School of Full Reservation of Deposits - an Economic Reflection of Modern Concepts in Banking and Monetary Policy
Summary:
The study presents a comparative analysis of the two modern pro-market schools in the field of monetary theory and banking – the school of free banking with fractional reserves and the school of full deposit reservation. In this way, the paper outlines the guidelines to be followed in developing theories, concepts and proposals for improving or perfecting the money supply management. In concrete terms, the analysis considers the alternatives for the implementation of banking and the positioning of the central bank in the schools of free banking with fractional reserves and the full reservation of deposits, the methodological nature of a market process in their frameworks and an interpretation of the two schools in relation to the functions of deposits, the interest rate, deflation and quantitative easing.
