Monetary Reform: A Better Monetary System for Iceland [pdf] (forsaetisraduneyti.is)

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."