Abolish fractional reserve banking and passes law

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Reference no: EM13838610

Suppose for a moment that someone with legislative power decides to abolish Fractional Reserve Banking and passes a law that forces banks to only lend the money they own, that is M0. What would be the economy-wise implications of such a change in the long run and what in the short run? In particular with such a criteria in mind as mortgages, interest rates and dispossessions.

Reference no: EM13838610

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