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Accounting for Fractional-Reserve Banknotes and Deposits

Originally published in Independent Review

Contrary to Hülsmann, fractional-reserve banking prevailed over warehouse banking by offering customers a better deal, not by government intervention.

Contrary to Hülsmann, fractional-reserve banking prevailed over warehouse banking by offering customers a better deal, not by government intervention. No examples of the legal suppression of an explicit money warehouse have ever been discovered, although examples of legally protected money warehousing can be found today, in such services as fully guaranteed gold storage and bank safe-deposit boxes (which U.S. law treats as a bailment).

Read the article at the Independent Review.

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