Another "Compromise" Proposed

"We stand at an unusual crossroads. At the moment, banks are holding nearly 100% reserves for transactions deposits. (As of November 19, they had about $652 billion in reserves for about $700 billion in transactions deposits.) We could implement the 100%-reserve rule now for transactions deposits, without creating much impact on the banking system. All that would happen would be that these reserves would not be lent out in the future, which would keep the banks solvent going forward. If we really want to "invest" taxpayer dollars to stabilize the financial system, why not use just $48 billion as a reserve injection, and enforce 100% reserves?

Naturally, it is better not to force taxpayers to subsidize this policy change to the benefit of the banks. However, forcing taxpayers to pay $48 billion for long-term stability is far better than forcing them to pay $1 trillion to create future crises. We have a unique opportunity to provide future stability for our banking system. Sadly, it is an opportunity that will almost assuredly pass us by."


http://mises.org/story/3237