Economics of Liberty

5 Things You Need to Know about Iceland’s Fractional Reserve Banking Scheme

#4. There Are Almost Zero Good Options

Typically, currencies that don’t have an expanding monetary base, e.g., a 100% reserve, will tend to appreciate against those that do. As countries print more money, their currencies fall in value against those that don’t. So if Iceland adopts 100% reserve banking by law, we can expect other countries to find Icelandic goods more expensive over time. This would hurt the export nation.

; })();