The second installment of my review of Jesus Huerta de Soto’s book, Money, Bank Credit, and Economic Cycles, appears today on the Free Market News Network. According to Huerta de Soto’s reading of history, medieval banks that provided fractional-reserve demand accounts were "legally corrupt" and "disgraceful". I suggest an alternative view:

[M]edieval banks specialized in providing payment services by account transfer. If a customer's purpose was to use bank payment services, that purpose did not require 100-percent reserves. Payment services could in fact be more economically provided by a demand account against which the bank held fractional reserves.