…e threat of bank runs. This can be 'easily' done by making all commercial banks lending and deposit taking operations 'agents' for the Central Bank. It would mean every deposit would be held on the books of the Central Bank, but the operation of the deposit holding function and paymetns system would continue via your commerical bank, acting as agent for the Central Bank. That is, only the legal and risk relationships would change, not the commercial and functional relations. The same with lending. By having commerical banks authorised to issue new Central Bank money as loans, we can reverse the 'guarantees'. Instead of the Central Bank guaranteeing deposits, the commcerical banks would guarantee repayment of the loans they make. This would be in consideration of the Central Bank allowing the commerical bank to earn interest on the loans which would be at no cost to the banks (which is effectively the situation now). Then if a bank lends unwisely, so that defaults exceed its capital, the bank would fold and the officers lose their jobs and shareholders lose their investment.... like any other failed business. Depositors would not be at risk as their money would be with the Central Bank. Also borrowers who were making their payments would not need to have their loans called in to repay deposits. The Central Bank could take over operations of the failed bank, using the failed banks staff and system…