<p>Examine this statement:</p>

<blockquote>
  <p>If you want a gold standard, it's easier to set bank's reserve requirement to 100%.</p>
</blockquote>

<p>The only sense in which this is true is that it eliminates fractional reserve lending. </p>

<p>However, a key defining characteristic of the gold standard is that government-issued money can be converted into gold upon demand. This creates a real constraint upon government fiscal policy. Having a 100% reserve requirement does not imply such a constraint on government policy, the currency can be a fiat currency.</p>

CC BY-SA 4.0
2020-05-05T15:48:21.197Z
2020-05-05T15:48:21.197Z
Brian Romanchuk
<p><strong>Statement:</strong></p>

<blockquote>
  <p>If you want a gold standard, it's easier to set bank's reserve requirement to 100%.</p>
</blockquote>

<p><strong>Context:</strong>
This was a comment in a video telling how government actions influence monetary inflation.</p>

<p><strong>Question</strong>: Is the statement true? </p>

<p><strong>P.S.</strong>: Please, give a source to the answer. </p>

CC BY-SA 4.0
2020-05-03T22:46:33.210Z
You could search on the internet for the “Chicago plan” or”full reserve banking.“ Full reserve banking is obviously not the same thing as the Gold Standard, since governments are not forced to keep their currency at a certain parity to gold.
Brian Romanchuk
CC BY-SA 4.0
2020-05-04T19:45:22.200Z
If you want gold standard, the heart must have what it wants. But how do you measure how "easy" setting bank reserve requirements? What exactly are you asking here?
Giskard
CC BY-SA 4.0
2020-05-04T19:45:47.337Z
Also... are you outsourcing a Youtube comment war to this SE?
Giskard
CC BY-SA 4.0
2020-05-05T06:19:09.513Z
@Giskard I can't understand the confusion my question provoked.
Oshio
CC BY-SA 4.0
2020-05-05T06:19:17.767Z
@BrianRomanchuk seems to have understood my doubt, "Chicago plan" and "full reserve banking", were a good keywords for searching at google.
Oshio
<macroeconomics><money-supply><reserve-requirement-ratio><gold-standard>
Can setting bank's reserve requirement ratio in 100% simulate gold standard?
Oshio
# Can setting bank's reserve requirement ratio in 100% simulate gold standard?

(Asked by: username_0 on 2020-05-03)

**Statement:**

> If you want a gold standard, it's easier to set bank's reserve requirement to 100%.

**Context:**
This was a comment in a video telling how government actions influence monetary inflation.

**Question**: Is the statement true?

**P.S.**: Please, give a source to the answer.

**Tags:** macroeconomics, money-supply, reserve-requirement-ratio, gold-standard

> **Comments:**
> **username_1**: You could search on the internet for the “Chicago plan” or”full reserve banking.“ Full reserve banking is obviously not the same thing as the Gold Standard, since governments are not forced to keep their currency at a certain parity to gold.  
> **username_2**: If you want gold standard, the heart must have what it wants. But how do you measure how "easy" setting bank reserve requirements? What exactly are you asking here?  
> **username_2**: Also... are you outsourcing a Youtube comment war to this SE?  
> **username_0**: @username_2 I can't understand the confusion my question provoked.  
> **username_0**: @BrianRomanchuk seems to have understood my doubt, "Chicago plan" and "full reserve banking", were a good keywords for searching at google.  

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## 1 answers

### Answer by username_1 on 2020-05-05. Score: 2

Examine this statement:

> If you want a gold standard, it's easier to set bank's reserve requirement to 100%.

The only sense in which this is true is that it eliminates fractional reserve lending.

However, a key defining characteristic of the gold standard is that government-issued money can be converted into gold upon demand. This creates a real constraint upon government fiscal policy. Having a 100% reserve requirement does not imply such a constraint on government policy, the currency can be a fiat currency.


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