Mervyn King's recent speech

AntiMatter

I was wondering what are the Economic Forum's thoughts on Mervyn Kings recent speech, in which he called for reform of the entire banking system.

To quote... "Of all the many ways of organising banking, the worst is the one we have today."

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/10/mervyn_king_says_banking_must.html

The speech seemed to include a call to the end of the practise of fractional reserve lending, in relation to risk free deposits.

“Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not coexist with risky assets.”



Apologies if it's been discussed already. I searched for a thread and couldn't find one.

Slippers

That passage is quoted on page four of this plan for full-reserve-banking (with normal fiat money) which was submitted to the UK's Independent Commission on Banking in November. The Commission is charged with making recommendations to the government on how the system should be changed.

Économiste Monétaire

OP, your link is from 2009, the speech was delivered two months ago. For those interested, you can find the full text of the speech here.

AntiMatter

Link amended.