Radical thinking by one of the great financial writers of today

Martin Wolf of the Financial Times argues that private banks should not be the entities entrusted with money creation:



Printing counterfeit banknotes is
illegal, but creating private money is not. The interdependence between
the state and the businesses that can do this is the source of much of
the instability of our economies. It could – and should – be terminated....Banking is therefore not a normal market activity, because it provides
two linked public goods: money and the payments network. On one side of
banks’ balance sheets lie risky assets; on the other lie liabilities the
public thinks safe. This is why central banks act as lenders of last
resort and governments provide deposit insurance and equity injections.
It is also why banking is heavily regulated. Yet credit cycles are still
hugely destabilising.



He argues that banks should be highly regulated and references The Banker's New Clothes.  Or that fractional reserve banking should be eliminated:  banks should hold 100% reserves against deposits.



I am just amazed to see Wolf make these arguments.




Strip private banks of their power to create money - FT.com