Fractional Reserve Banking Simulation

Download Simulation

The latest version of the simulation can be downloaded from the Files section:

http://www.mindmakers.org/projects/frb/files

Running the Simulation

You will need a version of python 2.6 or later that includes wx python, numpy, and matplotlib. If you don’t already have that, the easiest way to install it is probably to download the Enthought Python Distribution from:

http://www.enthought.com/products/epd.php

There are academic and free versions.

Then:

python grid.py

at the command line should suffice.

Warning

Although this simulation is useful to understand the entry level Economics Textbook description of the banking system, it is not particularly helpful in understanding today’s banking system. The textbook description appears to be a partial explanation of Gold Standard Era practices. After the collapse of the Bretton Woods agreement in the 1970’s, the gold standard was no longer used, and regulatory control shifted to the Basel Capital Accords in the 1980’s. Basel regulates lending in part as a multiple of the Bank’s capital reserve, and this has significant implications for the behaviour of the model.

Further Reading

frb_v03.tar - Version 0.3 of Simulation (100 kB) Jacky Mallett, 06/12/2012 09:05 pm