Milton Friedman and Anna J. Schwartz on the Inherent Instability of Fractional Reserve Banking

Hugh Rockoff

Chapter Chapter 5 in Coping with Financial Crises, 2018, pp 107-129 from Springer

Abstract: Abstract Throughout their long collaboration Milton Friedman and Anna J. Schwartz consistently argued that fractional reserve banking was “inherently unstable.” This paper traces the evolution of their ideas, the policies that they advocated to reduce the problems created by the inherent instability, and the implications of their views for current attempts to strengthen the banking system. Recent attempts to reform banking have incorporated some of the ideas that they advocated, but in some cases have moved in a different direction.

Keywords: Banking panics; Crises; Milton Friedman; Anna J. Schwartz; Free banking; Lender of last resort (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:stechp:978-981-10-6196-7_5

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DOI: 10.1007/978-981-10-6196-7_5

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