Deposit or loan? (A Law-and-Economics Critique of Fractional-Reserve Banking, Fiduciary Media, and Systemic Risk)
This article advances a law-and-economics critique of fractional-reserve banking, focusing on the legal taxonomy of bank contracts and the risk externalities of maturity transformation. We argue that the conflation of custody-like deposits with mutuum loans blurs property-rights boundaries and weake...
| Autores: | , , |
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| Tipo de recurso: | artículo |
| Fecha de publicación: | 2026 |
| País: | España |
| Institución: | Universidad Villanueva (UV) |
| Repositorio: | DIGI-UV. Repositorio Digital de la Universidad Villanueva |
| OAI Identifier: | oai:dnet:digi-uv_____::b048f05ec7582730b2bc447d025ecc52 |
| Acceso en línea: | https://hdl.handle.net/20.500.12766/862 |
| Access Level: | acceso abierto |
| Palabra clave: | Financial regulation Fractional-reserve banking Systemic risk |
| Sumario: | This article advances a law-and-economics critique of fractional-reserve banking, focusing on the legal taxonomy of bank contracts and the risk externalities of maturity transformation. We argue that the conflation of custody-like deposits with mutuum loans blurs property-rights boundaries and weakens liability discipline. Drawing on Austrian monetary theory, we link fiduciary media and demandable debt to pro-cyclical liquidity, run dynamics and the amplification of systemic risk. We reassess the real-bills doctrine and “demand loans,” showing why they do not neutralise run risk in practice and may obscure solvency–liquidity interactions. We then outline institutional reforms – 100%-reserve custodial deposits and a strict functional separation between custody and intermediation – together with market-based loss allocation. The article concludes with regulatory implications for lender-of-last-resort, deposit insurance, and capital/liquidity regimes consistent with risk reduction and legal coherence. |
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