DETAILED MONEY AND PARTIAL RESERVE BANKING in terms of Islamic Economics

The partial reserve system, which we can call the basis of modern finance, has been the subject of discussion from past to present due to its weak structure, the role it played in economic instability and the problems it created. This interest-based system, which ensures that most of the money supply is dematerialized, has led to a macro-ribâ system that envelops economic life. The full reserve system, which was developed as an alternative to this system, could not find its place in practice. From the point of view of Islamic economics, the fact that the current system is riba-oriented and causes an unfair distribution of resources has necessitated the evaluation of the alternatives put forward from this perspective. The fractional reserve system operates based on confidence that commercial banks and central banks will provide sufficient liquidity when needed, and thus in essence it is prone to financial crises.
is weak and fragile. From this perspective in the book, the problems that are claimed to arise in economies with the discovery of fractional reserve banking are examined, the applicability of full reserve banking and how sufficient it is for a solution are examined, and the suitability and drawbacks of both systems in terms of Islamic economics are discussed. In addition, the effect of both banking systems on economic stability was compared using an agent-based simulation model.