Thomas Draper

Tuesday 3rd


Governance in Finance


The concept of a fractional reserve to be retained in any bank or lending institution is as old as money-lending itself. The practical necessity of being able to maintain liquidity in terms of covering withdrawals was well understood by the early Jewish money lenders of renaissance Italian states.The statement “I would rather the worst debtor were indebted to me, than I to the best of creditors” is a saying still well known today amongst certain communities.

This presentation will thus first examine the need for, and history of fractional reserve banking. It will cover the organizations currently operating in this field, as well as the Basel 1, 2 and 3 accords which have been developed as a result of former problems. Thirdly, it will explore the scope and inclusiveness of international organizations and agreements in regard to their efficacy. Conclusions will be drawn, and a formula derived, to calculate appropriate financial penalties for transgression. Lastly, recommendations will be made for an effective enforcement system for a given fractional reserve.


Thomas Draper BSc(Hons), MSc, PGCE lectures in Economics and Finance at Prague College. He previously worked in the finance sector in London, and is particularly interested in international banking regulation and model-based testing of control and risk-aversion strategies in the banking sector. He is a published author and a member of the Royal Society of Literature, and is currently studying for his PhD. He lives on the edge of Prague with his wife, daughter, and two vastly over-affectionate dogs.