Interest on reserves, policy rules and quantitative easing

Edward Prescott

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


Hundred percent reserve transaction banking system is proposed with tax-free interest on demand deposits and interest bearing reserves. To eliminate shadow banking arrangements, a 100% tax on net interest income is proposed for limited liability businesses. All financing of businesses would be mutual as currently most is. With this arrangement there would be no bank runs associated giving rise to a financial crisis.

Original languageEnglish (US)
Pages (from-to)109-111
Number of pages3
JournalJournal of Economic Dynamics and Control
StatePublished - Dec 1 2014


  • 100% Reserve banking
  • Monetary policy rules
  • Transaction banks

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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