Iām guessing thereās an assumption, here that such an institution would be *more* responsible thenother banks that are connected to the Fed, but from the feds perspective, or my perspective, or anybody elseās perspective, we donāt know this. So while you think obviously they wouldnāt be diluting the shit out of the dollar if theyāre allowed to issue their own loans and make their own rules etc. etc. nothing really stops them and us Americans have the dollars brand to uphold.
Discussion
if you are fully reserved then you canāt make loans at longer than zero duration so there is precisely nothing to worry about from the perspective of the brand of the dollar. the biggest danger is you confuse people into thinking this is how all banks work and then they are disappointed when their own fractionally reserved bank goes bust.
That confusion already exists. The disappointment is an inevitability for those that donāt seek a haven. A fully reserved system sounds like the very hope of any new standard. Itāll act as a beacon, casting light on both the dangers of the current fractionally reserved and safeties of the fully reserved, no?
But like what does fully reserved mean if you donāt actually have dollars at the Fed? Do you have a stack of twenty dollar bills? Do you have tethers? Do you have treasurys?