This paper presents a balance sheet approach to understanding the reform of the financial system to include narrow banking. It was prepared for a conference at the Jerome Levy Economics Institute of Bard College, June 23-28, 1991

As recovery from the present economic crisis begins, policymakers must address what reforms will be made in financial system in order to prevent the reoccurrence of a similar crisis in the future. What will Congress do in response? In terms of long-term financial reform, what is to be expected...