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Abstract

This article tries to explain that fractional reserve banking is a system full of risks, even threatening the stability of the economy. Its implications led to many phenomena of the crisises, the most obvious exampleis the occurrence of the great depression in the 1930's. Related to this, Islam considers that fractional reserve banking is a great dengarous system, so that it has been considered contrary to the principles and values which brought by Islam. Concretely Islamic Bank offers a very better system with the system profit and loss sharing (PLS). Its implication is very positive, the stability of the economy is relatively stable and can stimulate the investment climate without the fragile aspects of liquidity, because the 100% reserve banking is in a must.

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