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In fact, I would argue that financial stability would be well served by completely separating the issuing of loans from the taking of deposits. In that system, all loans would be funded at the discount window, from borrower margin (or bank equity) and in the money markets, and deposit-taking banks would be simply the middle-man between the depositor and the central bank (and service provider for the clearing system). The deposit-taking banks would then make money on the spread between the rate of reserve remuneration and the rate paid to depositors.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon May 9th, 2011 at 04:24:37 PM EST
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