Full-reserve banking

Full-reserve banking (also known as 100% reserve banking) is a system of banking where banks do not lend demand deposits and instead only lend from time deposits. It differs from fractional-reserve banking, in which banks may lend funds on deposit, while fully reserved banks would be required to keep the full amount of each customer's demand deposits in cash, available for immediate withdrawal.

Monetary reforms that included full-reserve banking have been proposed in the past, notably in 1935 by a group of economists, including Irving Fisher, under the so-called "Chicago plan" as a response to the Great Depression. This proposal experienced a resurgence of interest among economists, central bankers, and citizen movements following the 2007-2008 global financial crisis.

No country in the world requires full-reserve banking.

Iceland's legislature considered it in 2015 after the 2008–2011 Icelandic financial crisis.

In a 2018 Swiss ballot initiative, 75% of voters voted against the Sovereign Money Initiative which had full reserve banking as a prominent component of its proposed reform of the Swiss monetary system.

For Islamic banking and finance, Mahmoud El-Gamal and Tarek El Diwany criticize conventional finance, with ideas echoing full-reserve banking. Malaysia's Islamic Financial Services Board published research comparing Islamic banking's asset-backed requirements with conventional fractional-reserve systems.

In Bhutan, ORO Bank partnered with Finastra to launch what claims to be Asia's first full-reserve online bank.

Full-reserve banking requires banks to maintain 100% reserves against demand deposits. This is a significant change from fractional-reserve banking, where only a small percentage of deposits must be on reserve. In sovereign money proposals, the state issues money rather than banks.