Fractional-Reserve Banking is Not Fraud

Fractional-reserve banking (FRB) is a flash point within libertarianism and a subject that elicits a rare sight: economists becoming emotional. For many in the Austrian school, FRB is theft, counterfeiting and fraud; some critics call for banning it. To other free-market economists, FRB is a practical way to increase and productively use the money supply for finance. What FRB Is and Is Not: A standard and neutral definition of FRB is, “the practice by which a bank maintains available reserves t