If the monetary medium held as reserves is banned, and the credit placeholder for that monetary medium is 'monetized' by making it the de facto monetary 'unit of account', then banks would become, by default, 100% reserved, while effectively relieving the banks of their $13-Trillion cash dollar debt obligations to their depositors. Banning cash relieves banks of their reserve requirements, and gifts the banks a $13-Trillion Boon.
**A ban on cash is the effective dissolution of nation states and of sovereignty, both political and individual, in favor of an unaccountable banking elite who will effectively control the lives and livelihoods of all, including governments.
You would be correct. We are so far beyond the point of banks actually being able to hold their reserves in cash, it ain't funny.
Just the 15 biggest banks alone hold more than $11.5Trillion in deposits. For the reserves to be held in cash would require them to hold almost all the cash in existence.
...but there is only $1.47Trillion in cash total, and nearly half of that circulates offshore.
So there's no way possible that they hold anything close to all reserves in cash. Most all of it is just numbers on a computer screen and they hold just enough cash on a daily basis to supply the needs of their deposit holders asking for cash, which is but a drop in the bucket compared to reserve requirements.
In a nutshell, we already have a digital monetary system with a small number of physical notes to represent those dollars while you hold them outside the banking system. Ie: the cash in your wallet.
You can deposit money into a bank, and they can lend the majority of it out and only keep a fraction of the reserves.
Whether or not the reserves are physical cash, or some sort of digital currency that's loaded onto a card or whatever is a matter of semantics, IMO. But I digress.
The real problem that I see with the monetary system is the overuse of credit caused by fractional reserve banking and multiple deposit creation.
A single $100 deposit can turn into a million in a few steps. That clearly is fraudulent.
A single $100 legal tender deposit turns into $100 legal tender reserves for the bank, nothing else. It's not multiplied, it's not divided, it's not loaned, it's not borrowed, it just reserves held by the bank and it has absolutely nothing to do with banks generating credit as a deposit and calling that a 'loan'.
There are two types of reserves that banks utilize, 1) cash reserves held in vaults, and 2) reserve assets held at the Fed.
Here are the 'Money Supply' facts: There is a total of $1.5-Trillion in U.S. legal tender dollars in circulation around the globe.
Of that, $280-Billion is in circulation within the U.S.
Of that, $74-Billion is held in bank vaults.
Of that $74-Billion, the Fed counts $64-Billion as 'Required Reserves' and $10-Billion as 'Excess Reserves'.
The 'required reserves' averages out to a 3% reserve ratio on demand deposits.
That $74-Billion held in bank vaults backs the $1.9-Trillion in credited demand deposit accounts. It also backs the $9.3-Trillion in credited savings accounts. It also backs all commercial credit transactions, from Main Street to Wall Street, and all points in between and beyond. It also backs all U.S.G. payments.
And that, is the reality of Fractionally Reserved Banking.
It has absolutely nothing to do with a bank's ability to generate credit as 'loans', and everything to do with a bank's ability to cover credited deposit account withdrawals.
Fed Held Reserves:
Reserve accounts held at the Fed are not legal tender FRNs, or 'cash', they are assets, primarily Treasuries, Agency Mortgage Backed Securities and Special Drawing Rights Certificates. These securities, held as reserves, are what the FOMC manipulates to achieve their erroneously labeled 'Monetary Policy'. The Fed's current balance of uncollateralized legal tender cash stands at $173-Billion. As per Paragraph 1, Section 16 of the Federal Reserve Act, the Fed is barred from using the legal tender FRNs for any purpose other than supplying demand for the notes, which is driven by depositor demand.