Fractional reserve banking in the Roman Republic and Empire

Abstract

The banking systems of the modern world are characterised by fractional reserve banking, but that system also existed in the Roman empire. This paper examines the legal basis in Roman law for banking on fractional reserves, and refutes the notion that the practice was illegal at Rome. Secondly, the nature and economic effects of Roman fractional reserve banking are examined with reference to financial instruments, endogenous money and financial crises.