Perspectives on Fractional Reserve Banking and Money Creation/Productio

Abstract

Today’s financial and banking systems are built on fractional reserve banking. This article sheds light on the role of commercial banks with regards to money creation/production under this system of fractional reserve banking. After exploring the nature of the process of money creation/production, the research paper diligently scrutinizes this process through the lenses of legal and religious moral precepts and ethic. The article concludes, with solid supporting arguments, that money creation/production under fractional reserve banking is immoral, ethically wrong and harmful at both individual and societal levels, with numerous legal and religious violations at its core.

Keywords

• commercial banks
• fractional reserve banking
• islamic banking
• legal and religious precept
• money creation