Icelandic Parliament investigating Full Reserve Banking

[bossy22]

10. it's clear to me that you don't understand modern banking

If a banks source of funding is from deposits, how is it supposed to lend out those deposits if it has to keep them on hand? The only way this works is if you twist the full reserve system- essentially you turn banks into investment institutions that are heavily involved in proprietary trading. The reason this would have to be is that the bank would need another source of funds that weren't subjected to the requirement to be held on hand like a deposit. That's what got us into the financial mess in the first place- when banks went from institutions that primarily took in deposits and made loans to institutions that were involved in complex derivative and speculative trading.