In 1935 during the worldwide Great Depression, economist Irving Fisher published a proposal for 100% Money, meaning one hundred per cent backing of bank deposits with central bank money (Fisher, 1935: for the history of Fisher’s proposal and his political strategy see Allen, 1993). This is also known as the Chicago Plan, because it was promoted by several Chicago economists at the time. According to this plan, banks should hold constant reserves of 100% for their customers’ current accounts. This is why this approach is also often called Full Reserve Banking. Money creation should no longer happen when commercial banks create loans. That power should be taken away from them. Commercial banking business would thus concentrate on its function as a money broker. Banks would only be allowed to issue loans against the amount of money the central bank had previously made available to them (Allen 1993: 705). The starting point for this concept is the observation that most payments are cashless. Irving Fisher estimated that already in his time 90% of payments were not made in cash but with ‘cheque book money’ (bank money that can be used at any time). The state does not have extensive influence over the creation of bank money because commercial banks can, when granting credit to customers, demand central bank credit, which in turn becomes new money. Thus commercial banks are able to create money many times over on the basis of very small reserve requirements. Bank money has become the most important payment medium although it is not backed by the same amounts of cash or central bank money. Fisher saw the rapid destruction of bank money as the main cause of the world economic crisis of that time. The collapse of the money supply that happened between 1929 and 1933 could have been prevented with a Full Reserve Banking System according to Fisher (Bordo/Rockoff 2011: 40). Fisher mentions various benefits of the 100% Plan (cf. Benes/Kumhof 2012: 5f.), for example that the sudden rise or collapse of credit giving by banks would be reduced. The dangers of either inflation or deflation would be reduced and the whole system be stabilized. The second advantage is the prevention of bank runs and bankruptcies. Overall, it would lead to a reduction in economic boom and bust and a much stronger link between money and the real economy. A third benefit that Fisher foresaw would be the extraordinary reduction of national debt because money would no longer be created by public borrowing. Thus the state could directly emit money itself instead of being forced to pay back interest-bearing loans to the banks. Because money would basically no longer be created through giving loans, private debt could also be reduced. Two analysts at the International Monetary Fund, Benes and Kumhof, recently modelled the Chicago Plan and concluded that the plan would indeed deliver the benefits that Fisher claimed for it (Benes/Kumhof 2012). Supporters of Full Reserve Banking also included Milton Friedman with his plan for monetary stability (Milton Friedman 1961: especially 65-75). A completely reserve-backed money would prevent runs on the banks because deposits are 100% backed and so customers with savings could be paid out in cash. Recently, the economist Binswanger made concrete proposals for the implementation of 100% money (Binswanger 2012). Thus central bank money, in the same sums as previously issued credit, could be made available to the commercial banks for a transitional period while loans are repaid, so that new fully backed loans can then be issued. One of the goals of Full Reserve Banking, alongside a stabilization of the money supply and a lessening of boom-bust cycles, is also the reduction of national debt by reducing the profits made from issuing money and in the longer term the reduction of private debt. Promoters of the idea see, in comparison with the existing system, a better chance of fulfilling these goals because fluctuations in the money supply, inflation and deflation can all be reduced. Critics argue however that the strict regulation of the creation of bank credit could lead to other finance products or assets taking over the functions of money. Alternatives would be sought and the possibilities of state control even more reduced (cf. Allen 1993: 716) (freely quoted from the German text: Philipp Degens (2013): Alternative Geldkonzepte, MPIfG Discussion Paper 1/13, with kind permission of the author).