During turbulent times, like the ones we are facing now, one of the main concerns for the public is the safety of their funds kept at financial institutions. While the traditional fractional reserve banking concept is familiar for most of the retail users, its alternative, the full-reserve banking model, is less common in practice. Nevertheless, some economists, especially ones from the Austrian school, have endorsed the full-reserve banking system during a crisis. For example, Nobel prize laureate Milton Friedman has advocated that current accounts should follow the full-reserve requirement (Friedman, 1959).
Funds in Bankera are electronic money, and this setup has similarities to the full-reserve banking, which can be an attractive alternative for traditional bank accounts in uncertain times. In this blog post, we would like to delve deeper and explain how this model works.
