Fractional Reserve Banking, Unrealizable Capital, and Bank Runs as Temporal Irreversibility

This paper proposes a novel framework for financial instability by defining fractional reserve banking as a critical temporal system. We argue that bank runs are not psychological panics, but temporal phase transitions occurring when the density of irreversible historical commitments exceeds the system’s capacity for future postponement. By introducing the 'Realizability Density Equation,' we formalize the threshold of temporal insolvency, where collective demands for realization necessitate a physically impossible reversal of history. Financial collapse is thus redefined as the exhaustion of postponable future rather than a mere liquidity shortage.

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Publication Details

Journal
Zenodo (CERN European Organization for Nuclear Research)
Published
2026-01-09
DOI
https://doi.org/10.5281/zenodo.18203011
Primary Topic
Economic theories and models
Type
article
Field-Weighted Citation Impact
0.00
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article

Fractional Reserve Banking, Unrealizable Capital, and Bank Runs as Temporal Irreversibility

Claudio Bresciano
Zenodo (CERN European Organization for Nuclear Research)
Economic theories and models
article

Fractional Reserve Banking, Unrealizable Capital, and Bank Runs as Temporal Irreversibility

Claudio Bresciano
article en

Abstract

This paper proposes a novel framework for financial instability by defining fractional reserve banking as a critical temporal system. We argue that bank runs are not psychological panics, but temporal phase transitions occurring when the density of irreversible historical commitments exceeds the system’s capacity for future postponement. By introducing the 'Realizability Density Equation,' we formalize the threshold of temporal insolvency, where collective demands for realization necessitate a physically impossible reversal of history. Financial collapse is thus redefined as the exhaustion of postponable future rather than a mere liquidity shortage.

Zenodo (CERN European Organization for Nuclear Research)
Decent work and economic growth
Openalex Percentile: Top 94%
Economic theories and models
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