IMF paper finds evidence in favour of ‘Chicago Plan’

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A working paper published by the International Monetary Fund (IMF) in August weighs the benefits of the so-called ‘Chicago Plan', originally proposed during the Great Depression, which requires banks to back 100% of deposits using government-issued money and only issue debt from retained earnings.

The authors, Jaromir Benes and Michael Kumhof, use a dynamic stochastic general equilibrium model of the US economy from 1990-2006, finding evidence in support of four major advantages. The paper

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