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> Having a banking license has huge advantages, namely being able to create money out of thin air ...

No, the ability to create money out of thin air is related to the act of lending itself, it has nothing to do with a banking license. I wrote about this at length here:

https://www.attejuvonen.fi/money-out-of-thin-air/




You're technically correct. We could create money out of thin air if you chose to accept my IOUs. But pragmatically you're exceedingly more likely to accept my IOUs if I have a banking license.

Promissory notes are a thing and occasionally used for real estate transactions among other things, so it's not like it's just theoretical, but most private individuals will never issue an IOU, written or otherwise, for more than the cost of dinner.

Edit: Also your article is a nice introduction to the concept.

Another good example is when the State of California started paying its bills with Registered Warrants[1] when it ran out of money a few years back. They don't have a banking license, but they do have taxing authority over a trillion dollar economy so banks were actually willing to allow warrant holders to deposit them. In large part this is because they can be transferred and can be used to extinguish California tax liabilities. Needless to say a sovereign State also has other ways to coerce banks operating in its territory, but to my knowledge no such measures were necessary.

Another fun example is Amazon gift cards. Their effective value can be up to whatever planned spend you can offset. It's basically an IOU redeemable for goods or services. I imagine it wouldn't too to hard to talk a private individual into accepting an Amazon gift card at near par to settle a debt.

[1] https://www.sco.ca.gov/eo_registered_warrants_2009_faqs.html


If you ask me to prove I have $10,000 of money, available to spend, which of the following would you accept as proof:

A) $10,000 of cash.

B) Seeing my balance at a bank (e.g. entering the bank URL on a device you control, and then watching as I log in and navigate to the statement).

C) Proof that a non-bank company owes me $10,000.

Most people would only count A and B, because they're perfectly liquid.




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