

Monetary Reform: A Better Monetary System for Iceland [pdf] - CuriousSkeptic
http://www.forsaetisraduneyti.is/media/Skyrslur/monetary-reform.pdf

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valdiorn
You probably need to give people some context on what this is.

Annars getur tetta verid svolitid ruglingslegt :)

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CuriousSkeptic
Fair enough :) Here's the abstract: "This report is a study of monetary
problems in Iceland and in what part they may be caused by the current
monetary mechanism, the fractional reserve system. There is indication that
the fractional reserve system may have limited the Central Bank's ability to
control the money supply while giving banks both the power and incentive to
create too much money. Indeed, commercial banks expanded the money supply
nineteen-fold in the fourteen year period that ended with the banking crisis
of 2008. There is also indication that the fractional reserve system may have
been a long term contributing factor to various monetary problems in Iceland,
including: hyperinflation in the 1980s, chronic inflation, devaluations of the
Icelandic Krona (ISK), high interest rates, the government foregoes income
from money creation, and growing debt of private and public sectors.
Economists have long been aware of the problematic nature of the fractional
reserve system and proposed various reforms. A program for monetary reform by
Fisher et al in 1939 received the support of 235 economists from 157
universities and colleges but was not imple- mented. This report reviews some
of the more frequently mentioned proposals for monetary reform: 100% Reserves,
Narrow Banking, Limited Purpose Banking and describes in detail the Sovereign
Money proposal. In a Sovereign Money system, only the central bank, owned by
the state, may create money as coin, notes or electronic money. Commercial
banks would be prevented from creating money. This report describes how such a
Sovereign Money system could be implemented and what steps would be required
for a successful transition."

