A critical legal analysis of commercial bank money

Because of the role that commercial banks play in today’s financial and banking system, this article discusses the activity of commercial banks with regards to how money (commercial bank money) is created. By exploring the nature of the fractional reserve banking system, this article establishes that commercial banks are not mere financial intermediaries, but rather exclusive money creator. A critical legal analysis of this money creation process concludes, with solid supporting arguments, that commercial bank money is riddled with legal violations and harmful socioeconomic effects, which are inevitably borne by the individual and society in the form of ‘privatizing the profits of money creation’ and ‘socializing the losses and its outrageous financial burden’. Keywords: Commercial banks; Commercial bank money; Fractional reserve banking; Legal Analysis; Money creation Introduction The fact that things are scarce everywhere is, for us as humans, the most fundamental economic reality of our existence. We don\u27t have enough resources to accomplish all of our goals. Time is limited, and so are all other available resources. This compels us to carefully and wisely choose how to use (or not use) these resources. The use of all means of action is basically governed by the law of diminishing marginal value, which stipulates that the marginal value (relative importance) of any unit of an economic good for its owner decreases with the control and acquisition of a greater overall supply of this good, and vice versa. For example, the marginal value of a sip of water (additional) is very different for a person stranded in a desert than for the same person diving and swimming in a lake. Therefore, the creation (production) of additional units of money makes money less valuable for the owners of these additional units, especially when compared to all other goods and services. Consequently, buyers of goods and services will tend to pay more in exchange for these goods and services; in turn, sellers of these goods and services will tend to demand higher money compensations. In short, money generation results in a propensity for prices to rise, even though this may occur gradually over time in a process that has a varied impact on each price. To legally analyze the process of money creation in today’s banking system, this article first explores the role of commercial banks by providing evidence pointing to the fact that commercial banks are not financial intermediaries but rather (de facto) private entities with an exclusive right (privilege) to create money out of thin air. The article adopts a descriptive-analytical approach to explore the nature of commercial bank money under fractional reserve banking as it builds its arguments and portrayal of the fractional reserve system on previous empirical research backed with assertions of experts and practitioners in the field of finance and banking. After that, the research paper delves into the discussion with a critical analysis of this money creation or production process from different legal perspectives. The article concludes, with irrefutable supporting arguments, that commercial bank money is blatantly harmful to the individual and society, with many legal violations at its core. Some of the most influential and pertinent previous research on the subject came from Huerta de Soto[1] (2006) and Hulsmann[2] (2008); they both offer comprehensive analysis in their legal examination of the fractional reserve banking system, Bagus & Howden, (2010[3], 2011[4]) contributed to the subject by arguing against free banking as it is conceptualized by the likes of Selgin[5] (1988), who in turn responded to their arguments (2011) with his rebuttal[6] (article). My article builds and expands on the works mentioned above by delving, with new perspectives and arguments, deeper into the nature of this process of money creation by commercial banks to expose its inherent socio-economic and legal harms and defects that essentially constitute blatant violations of the legal framework.1. What is money? And how is it created (commercial bank deposit money)? Most attempts to define money focused on its functions. It is anything that is generally accepted by law in the fulfillment of obligations and is used as an intermediary in the exchange, as a unit of account, as a store of value, and as a tool for settling deferred or future payments. Scitovsky argues that money “is a difficult concept to define, partly because it fulfills not one but three functions, each of them providing a criterion of moneyness … those of a unit of account, a medium of exchange, and a store of value”.[7] Standard textbooks define money as any medium that is commonly considered to have the following three properties: (1) store of value, which allows money holders to conserve purchasing power over time; (2) unit of account, which serves as a reference in which the value of goods and services is measured; and (3) medium of exchange, which makes it ideal to settle transactions.[8] For this research, I will include the definition of the form of money that this paper’s discussion part will revolve around; commercial bank money (deposit money). The portion of the total money stock held by non-bank agents in the form of electronic bank deposits is what we call commercial bank money. While keeping system-wide money stocks constant, bank customers (commercial bank money holders) turn their commercial bank money into physical cash back and forth (similar to transferring funds electronically across banks). So when banks lend money (granting a loan), they create a deposit (money). Therefore, lending adds to the bank’s total money stocks, while loan repayments destroy its total money stocks accordingly. In contrast, non-bank lending refers to a transfer of (already) existing legal money stocks from one economic agent to another. Hence, through a debt, one economic agent subtracts from its money holding and adds to another’s.[9] First, I must briefly tackle Fractional Reserve Banking, as it is an essential component of all today’s modern economies. The practice of lending out most, but not all, of the deposits held by bankers (institutions) was first developed in Europe in the 16th century and has been followed ever since. To protect the bank in the event that many or all of its depositors demanded cash at the same time, the practice of holding a fraction in reserve was initially instituted. Fractional reserve banking allows banks to “create money” through lending, thus increasing the money supply during periods of economic expansion and growth, whether it is mandated by caution or a system of banking regulations. The majority of economics textbooks assert that banks “create” money. ”Eighty percent of the bank deposits are loaned out, but they’re still considered as being ‘in the bank”.[10] Throughout the era of gold trading, Goldsmiths observed that not everyone demanded their deposits simultaneously, which essentially opened the door for fractional banking to exist. People received promissory notes whenever they deposited their silver and gold coins at goldsmiths. Later, the notes were recognized as a valid medium of exchange, and their owners used them in commercial transactions. The goldsmiths understood that not every saver/depositor would withdraw his deposits at the same time because depositors used the notes directly in trade. Therefore, goldsmiths started issuing loans and bills with high interest rates along with the storage fee they were charging the deposits. Eventually, the goldsmiths turned from being safe-keepers of valuables to interest-paying and interest-earning banks. Later, history revealed that whenever the note-holders lost faith in the goldsmiths, they would withdraw all their deposits simultaneously, leaving the bank (goldsmith) insolvent due to the lack of reserves to support the mass withdrawals. This prompted governments to develop laws to establish a central institution (agency) to control and regulate the banking industry. In this regard, Sweden established the first central bank in 1668, and the rest of the world followed. Central banks became in charge of regulating commercial banks, setting reserve requirements, and, more importantly, they became the lender of last resort to any commercial bank affected by banks runs.[11] Professor Salerno testified before the U.S. house of representatives and had this to say when asked about fractional reserve banking: “Fractional reserve banking occurs when the bank lends or invests some of its deposits payable on demand and retains only a fraction in cash reserves, hence the name “fractional reserve banking”. All U.S. banks today engage in fractional reserve banking.”[12] Similarly, Professor Cochran stated, “Fractional reserve banks developed from two separate business activities: banks of deposit, or warehouse banking, where banks offering transaction service for a fee; and banks of circulation or financial intermediaries. Circulation banking, if clearly separated from deposit banking, reduces transaction costs and enhances the efficiency of capital markets, leading to more savings, investment, and economic growth. Fractional reserve banking combined these two types of banking institutions into one: a single institution offering both transaction services and intermediation services. With the development of fractional reserve banking, money creation--either through note issue or deposit expansion--and credit creation became institutionally linked. Banks create credit if credit is granted out of funds especially created for this purpose. As a loan is granted, the bank prints bank notes or credits the depositor on account. It is a creation of credit out of nothing. Created credit is credit granted independently of any voluntary abstinence from spending by holders of money balances”.[13] Some economics textbooks claim that commercial banks must hold only a fraction of customer deposits as reserves and may use the rest to grant loans to borrowers. However, when awarding loans, commercial banks merely accept promissory notes in exchange for credit that they deposit (digitally) in the borrower’s account. Hence, deposits to the borrower’s account, as opposed to giving loans in the form of cash or currency, are part of the process banks use to create money. Because of this, whenever a bank grants a loan, it generates new money, increasing the total amount of money in circulation. For instance, when a person takes out a $100,000 mortgage loan, the bank credits the borrower’s account with the appropriate amount rather than handing him currency or cash equal to the loan’s value.[14] In an attempt to defend fractional reserve banking and commercial bank money, Rendahl and Freund said: “In recent years, some have claimed that banks create money ‘ex nihilo’. This column explains that banks do not create money out of thin air. From an economic viewpoint, commercial banks create private money by transforming an illiquid asset (the borrower’s future ability to repay) into a liquid one (bank deposits)”.[15] Notice how they considered ‘someone’s ability to repay in the future’ an illiquid asset, I am not going to focus on this debatable claim but rather examine how they portrayed the granting of a loan as an exchange of a borrower’s promise to pay back in the future for what they considered a liquid asset ‘bank deposits’. This begs the question: where did the bank get the liquid asset? Only three possibilities are conceivable in this context; a) prior to the borrower’s demand for the loan. The bank already had the money in its possession (bank’s liquid money – i.e. investors/savers money deposited with the bank), b) the bank created the money demanded by the borrower ‘instantly’ as soon as he approached it for the loan (computer inputs into the borrower’s deposit account) and c) the bank turned the borrower’s promise (ability) to pay in the future into an instant liquid asset (deposit money) which is exactly similar to what Rozeff[16] tried to argue in his defense of the fractional reserve banking by claiming that when banks grant loans they create new money in the form of a purchase of the borrower’s IOU in exchange of the bank\u27s IOUs, so ultimately the money in this magical context belongs to the borrower in the first place and yet the bank loaned him ‘his own future money’ with an obligation of him relinquishing the same amount of money to the bank in the future (plus interest)!! So the granted loan is basically computer inputs banks add to the borrower’s account. It is like ‘the bank’ saying I will lend you money that I don’t have (did not exist until you (the borrower) demanded it) because I have a right and privilege (by law) to create it (computer inputs) as soon as you demand it (need it). I am exchanging (trading) something that do not exist (new deposit money) for another thing that do not exist yet ‘today’, which is your ability (promise) to pay in the future. How can this not be creating money out of nothing?! Moreover, they cannot explain where did they get the liquid asset (bank deposits), as their premise would only make sense if the liquid asset they were referring to came from savings/investments (i.e., saving deposits), which in reality does not. So are commercial banks financial intermediaries? Do they create money out of thin air? Werner[17] (2014) (2014) examined the three hypotheses (theories) that are recognized in the literature. The financial intermediation theory of banking contends that banks are simply intermediaries, gathering deposits to be lent out like other non-bank financial institutions. The fractional reserve theory of banking holds that while individual banks are merely financial intermediaries and cannot create money, they do so through systemic interaction as a group. The third theory, known as the “credit creation theory of banking,” holds that every single bank can create money “out of nothing” when it extends credit. Which of the theories is correct has significant ramifications for research and policy. Unexpectedly, no empirical study has, up until now, tested the theories, despite the ongoing controversy. Werner carried out an empirical test whereby a loan is taken (borrow money) from a cooperating bank while its internal records are being scrutinized and monitored to determine whether the bank transferred funds from other accounts—within or outside the bank—or if they were created from scratch when making the loan available to the borrower. For the first time using empirical evidence, Werner’s study proved that banks individually create money out of thin air. The banks independently create (in his own words) the “fairy dust” that serves as the money supply. According to Werner’s study, customer deposits are accounted for on the financial institution’s balance sheet. The financial intermediation theory, which contends that banks are not unique and are essentially undifferentiated from non-bank financial institutions that must keep customer deposits off the balance sheet, conflicts with the empirical evidence provided by Werner’s study. While non-bank financial institutions record customer deposits off their balance sheet, banks treat customer deposits very differently. Werner discovered that the bank treats customer deposits as a loan to the bank, which is why they are listed under the heading “claims by customers.” This concords with the legal analysis of the demand deposit (current account) I previously conducted[18] (2022). Therefore, only the credit creation theory or the fractional reserve theory of banking can reconcile and make sense of these findings. The following statements are some valuable quotes from past and current literature: Schumpeter (1912): “It is much more realistic to say that the banks ‘create credit’, that is, that they create deposits in their act of lending, than to say that they lend the deposits that have been entrusted to them. And the reason for insisting on this is that depositors should not be invested with the insignia of a role which they do not play. The theory to which economists clung so tenaciously makes them out to be savers when they neither save nor intend to do so; it attributes to them an influence on the ‘supply of credit’ which they do not have.”[19] Keynes (1930): “... [a bank] may itself purchase assets, i.e. add to its investments, and pay for them in the first instance at least, by establishing a claim against itself. Or the bank may create a claim against itself in favour of a borrower, in return for his promise of subsequent reimbursement; i.e. it may make loans or advances.”[20] Minsky (1986): “Money is unique in that it is created in the act of financing by a bank and is destroyed as the commitments on debt instruments owned by banks are fulfilled. Because money is created and destroyed in the normal course of business, the amount outstanding is responsive to the demand for financing. [.] Banking is not money lending; to lend, a money lender must have money. The fundamental banking activity is accepting, that is, guaranteeing that some party is creditworthy. [...] When a banker vouches for creditworthiness or authorizes the drawing of checks, he need not have uncommitted funds on hand. He would be a poor banker if he had idle funds on hand for any substantial time. In lieu of holding non-income-earning funds, a banker has access to funds. Banks make financing commitments because they can operate in financial markets to acquire funds as needed; to so operate, they hold assets that are negotiable in markets and hold credit lines at other banks.”[21] Berry et al. (2007): (The Bank of England Quarterly Bulletin): “When banks make loans, they create additional deposits for those that have borrowed the money.”[22] Constâncio (2011): (Vice President, the European Central Bank, 2010-18): “It is argued by some that financial institutions would be free to instantly transform their loans from the central bank into credit to the non-financial sector. This fits into the old theoretical view about the credit multiplier according to which the sequence of money creation goes from the primary liquidity created by central banks to total money supply created by banks via their credit decisions. In reality the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.”[23] King (2012): (Governor, the Bank of England, and Chairman, the Monetary Policy Committee, 2003-13): “When banks extend loans to their customers, they create money by crediting their customers’ accounts.”[24] Turner (2013): (Chairman, Financial Services Authority, UK, 2008-13): “Banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers: they create credit and money ex nihilo - extending a loan to the borrower and simultaneously crediting the borrower’s money account. That creates, for the borrower and thus for real economy agents in total, a matching liability and asset, producing, at least initially, no increase in real net worth. But because the tenor of the loan is longer than the tenor of the deposit - because there is maturity transformation - an effective increase in nominal spending power has been created.”[25] Bank of England (2014): “One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them… rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks… Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”[26] So the Bank of England has come forward clearly in support of the credit creation theory. Bundesbank (2017): “Bank loans to non-banks are the most important money-creating transaction in terms of quantity…long-term observations have found that lending is the most significant factor propelling monetary growth.”[27] 2. The legal analysis After establishing that banks are not financial intermediaries by putting forward irrefutable economic arguments and empirical evidence asserting that they do create money (out of thin air) in reality, let us delve into the interlocked socioeconomic and legal aspects of these findings. The legal doctrines that support and justify fractional reserve banking have not been founded on previously established legal precepts that gave rise to specific legal acts. Instead, they have been drafted and set ex post facto. It was crucial for the banks and their advocates to find sufficient legal grounds to preserve the network of vested interests that fractional-reserve banking generates “for them” overall.[28] First, the acts of using depositors’ money and/or issuing deposit receipts for a greater amount than is deposited share a common trait with all other illegal acts of misappropriation, which have always been the focus of doctrinal analysis by criminal law specialists. Because of this, the similarities between the two sets of actions are so striking that theorists could not remain unmoved by this legal inconsistency. Unsurprisingly, significant efforts have been made to justify what is utterly unjustifiable: to make it acceptable and legal from the perspective of general legal principles to misappropriate funds deposited for safekeeping and to issue ‘unbacked’ deposit receipts without having the corresponding deposited money in reserves. There are two main categories of doctrinal justifications for using a fractional reserve in a demand deposit (current account). The first group sought to

A scrutiny of the demand deposit (current account) through the lenses of law and Islamic jurisprudence

Demand deposits (current accounts) are crucial to banks activity, particularly with regards to granting loans. For commercial banks, the primary source of funds is bank deposits. This article attempts to analyze and discuss the legal nature of the demand deposit contract, with a particular focus on the widely agreed upon characterization of this contract as a loan contract in all today’s legal systems (Common law, Civil law, Islamic law and hybrid legal systems). After discussing the arguments and building blocks of the loan theory and examining the essence of both contracts through the lenses of economics, law and Islamic jurisprudence, this paper concludes that the demand deposit contract cannot be considered a loan contract, with supporting arguments from economic, legal and Islamic jurisprudential perspectives. Keywords: Demand deposit contract, Loan contract, Civil law, Common law, Islamic law and jurisprudence Introduction Money deposit operations are legal actions between the bank and the customer, and not just a physical procedure that is limited to the customer handing over the money to the bank employee (or transfer funds), and then recovering it whenever he wants, or as agreed upon. Given that the bank deposit is distinguished by a set of characteristics; the jurisprudence differed about its legal nature. There are those who consider it a complete deposit to which the general rules stipulated in the Civil Code are applied, while another part of the jurisprudence considers it an abnormal or irregular deposit, because the bank is not obligated to return the same deposit, but rather to return a similar or an equal to it. As for the third opinion, which is the overwhelmingly accepted and adopted one, they consider it a loan because of the financial conduct of the bank regarding the use of the deposited money as its own implying and assuming a transfer of ownership of the deposited amounts from the customer to the bank upon deposit. By adopting a descriptive analytical approach, the article explores the roots and background of the widely established characterization of the demand deposit as a loan contract in all today’s legal systems (Common Law, Civil Law, Islamic Law and hybrid legal systems). The paper looks into the economic and legal elements of the demand deposit with the aim to detect its characteristic distinctive features in comparison with the loan contract. This paper makes a unique contribution by examining the demand deposit contract from economic, legal and Islamic jurisprudential perspectives. It discusses the arguments put forward in support of the characterization of the demand deposit as a loan contract, provides compelling arguments to refute this characterization and concludes that the demand deposit cannot be a loan contract. Prior research on the subject of Huerta de Soto[1](2006) and Bagus & Howden (2009[2], 2013[3]) mostly revolved around the fractional reserve banking system and whether it should be considered fraudulent or illegal, with the proposition of a full (100%) reserve system as a solution to remedy that. Huerta de Soto provided compelling arguments to support the characterization of the demand deposit as an irregular deposit contract, and this article expands on his work by delving deeper into the loan theory in order to expose its inherent flaws and loopholes from the perspectives of economics, law and Islamic jurisprudence.  Even argumentative papers of Rozeff[4](2010) and Huber[5](2013) in response to the full reserve banking proponents focused merely on putting forward arguments against the full reserve system from an economic perspective, largely ignoring the legal perspective (and in the case of my article the Islamic jurisprudential perspective). These discussions did not address some major economic, legal and Islamic jurisprudential issues related to the characterization of the demand deposit as a loan contract (which is essentially known to be the main driver of the fractional reserve banking system). Since the core element of this article is to discuss the characterization of the demand deposit account as a loan contract, the first section describes the basic economic concept of a demand deposit. Section two presents an overview of the stance of all different legal systems on the classification of this contract. The final part of this article tackles the subject matter with a thorough and detailed discussion of the characterization of the demand deposit as a loan contract from these three different (yet interlocked) perspectives: economics, law and Islamic jurisprudence. 1.The economic concept of the demand deposit: Deposit (the noun) in English language is defined in the Merriam Webster dictionary as ‘the state of being deposited, something placed for safekeeping: such as money deposited in a bank’. The Britannica dictionary defines it as ‘an amount of money that is put in a bank account’, so the deposit is what is deposited - i.e. left – whether it is money or other things with the one who keeps it, in order to return it to the one who deposited it whenever he asks for it. In Islamic Jurisprudence ‘Fiqh’ Deposit is called Wadiah, which is defined as money entrusted to others for safekeeping; That is, money that a person ‘the owner’ took and handed over to someone else to keep it safe and return it to him when called upon. In other words, it is simply transferring the preservation (safe keeping) of the owned thing that can be transferred, such as animals, house furniture, gold and silver, to be entrusted to the depositary. In this covenant or contract depositing does not involve the transfer of ownership itself as in selling and buying, gift, charity, mortgage and other contracts in which the property (title) is transferred from one person to another. In short, wadiah according to the Hanafi school is to delegate and entrust someone else to protect and safe keep his money, for the Malikis it is to authorize and entrust the safe keeping and preservation of money, and according to the Shafi’is it is the contract that requires safe keeping. Similarly, the Hanbalis define it as an authorization – procuration- to preserve and safe keep, benevolently.[6] In economics, deposit can be defined as everything that individuals or organizations put in banks temporarily, short or long, for the purpose of safekeeping. These deposits are often embodied in the form of legal money, although they can sometimes take other forms. The demand deposit, which is also called the current deposit or the current account (even checking account and transaction account in some countries), is considered one of the most common bank deposits, as it represents the largest part of the bank’s resources. It is an agreement between the bank and the customer according to which the latter deposits a sum of money with the bank, provided that he has the right to withdraw it upon request. Demand deposits have characteristics that distinguish them from other deposits, and as its name indicates, these deposits are always at the disposal of their owners, who can resort to withdrawing them in whole or in part whenever they want, and without prior notice – this is true for almost all forms of current accounts –[7]. The deposit, even if it is in the possession of the bank, is at the absolute disposal of its owner. The bank is not entitled to impose restrictions or conditions on its owner during the withdrawal, and it may not use any argument that would constitute an obstacle for depositors to use these deposits. In return for this feature, the owners of this type of deposit cannot benefit from interests. They cannot impose this on banks due to the nature of this type of deposit, even though the bank can use these deposits to make loans, and nothing prevents it from doing so. This banking practice enables banks to exploit and use inexpensive financial resources allowing for expansion of loans at a relatively very low cost. This underlines the importance of this type of deposit, as it constitute the main source of money and loan expansion in banking activity, making the bulk of its external resources.[8] Demand deposits make up most of a particular measure of the money supply—M1[9]. As of October 2022, the total amount of demand deposit accounts in the U.S. was $5.26 trillion. This compares to$1.4 trillion five years ago and $733 billion 10 years ago.[10] 2. The legal characterization of the Demand Deposit:  This section portrays the current legally accepted characterization of the demand deposit account in different legal systems and jurisprudences. Before going through the modern era’s legal characterization of the demand deposit, it has to be noted that Roman legal tradition described in detail the covenant of monetary ‘demand’ deposit and the principles that govern it, along with the crucial differences between this contract and other legal contracts, such as the loan. Roman bankers’ operations included two different types of contract. The first one was in the form of a deposit, which involved no right to interest and obliged the depositary to maintain the full, continuous availability of the money in favor of the depositor, who had absolute privilege in the case of bankruptcy. And, the second form of operation they carried out was receiving loans, which obligated the banker to pay interest to lenders, who lacked all privileges in the case of bankruptcy. This offers an unequivocal clarity in the distinction between the two contracts.[11] 2.1. Common law - English Law Acting as a depository for the money of members of the public is essentially the most basic service a bank can provide. Commercial banking is based on this service; as it provides a legal definition for banking. The public generally holds its deposits with banks in the form of accounts. As a matter of English law current account holders are entitled by contract to demand cash over the bank\u27s counter and to have checks (cheques) honored and collected.[12] The characterization of the demand deposit account as a loan comes from the identification of the relationship between customer and bank in relation to the current account as basically that of creditor and debtor. That is why banks can be served (third party debt/garnishee orders) by the judgment creditors of its customers. This means that a third party debt/garnishee order obliges the bank to pay the judgment creditor rather than its customer what is owed.[13] In common law, other important obligations associated with the current account are contained in the classic statement in the judgment of Atkin LJ in Joachimson v. Swiss Bank Corp., (1921): The bank undertakes to receive money and to collect bills for its customer\u27s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or facilitate forgery.[14] The legal position in relation to the banker-customer is largely expressed as being constituted by implied terms.[15] Going back in the common law precedents’ history, Foley v. Hill was a historical development when, in 1848, the House of Lords characterized the banker-customer relationship as fundamentally a debtor-creditor relationship. This enabled banks to treat money deposited with them as their own. Consequently, the only obligation they had was to return an equivalent amount. This brushed aside all rival characterizations—bailment, trust, or agency— on the grounds of limitations on how the moneys could be employed which was essentially incompatible with the envisaged ownership of the deposited money by the bank. As Lord Cottenham LC noted, the characterization of the bank as debtor meant the money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it.[16] Lord Cottenham LC said: Money, when paid into a bank, ceases altogether to be the money of the principal; it is by then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into a banker’s is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself, paying back only the principal, according to the custom of bankers in some places, or the principal and a small rate of interest, according to the custom of bankers in other places. The money placed in custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands. That has been the subject of discussion in various cases, and that has been established to be the relative situation of banker and customer. That being established to be the relative situations of banker and customer, the banker is not an agent or factor, but he is a debtor.[17] 2.2. Civil law - French Law and Spanish Law: In French law, when explaining deposits received by banks Article 02 of the Law n° 84-46 of January 24, 1984 relating to the activity and control of credit institutions stipulates ‘Funds received from the public are considered to be funds that a person collects from a third party, in particular in the form of deposits, with the right to use them for their own account, but on condition that they be returned.’[18] Similarly, in Spanish law we find that the Law 10/2014 of 26 June 2014 on the regulation, supervision and solvency of credit institutions defines credit institutions by mentioning their exclusive job of collecting funds from the public to be used in granting loans, Article 01 stipulates ‘Credit institutions are authorized companies whose activity consists of receiving deposits or other reimbursable funds from the public and of granting loans on their own account’[19]. Moreover, Article 309 of the Spanish Commercial Code stipulates that: Provided, with the consent of the depositor, the depositary of the goods subject to deposit disposes of these, either for himself or his business, or for the operations he is entrusted, the rights and obligations inherent to depositor and depositary shall cease, and the rules and provisions applicable to business loans or agencies or the contract in substitution of the deposit into which they may have entered, shall apply.[20] 2.3. Arab hybrid legal systems – a mixture of civil law and Islamic ‘sharia law’: Many Arab legislations defined the cash bank deposit in its commercial law, or in a law specific to banking - bank operations - , as in Article 301 of the Egyptian Trade Law which stipulates that ‘a cash deposit is a contract that authorizes the bank to own the deposited money and use of it in accordance with its activity, with an obligation to return the same amount to the depositor in accordance with the terms of the contract.’[21] Article 339 of the Omani Commercial Law defines a cash bank deposit as ‘a cash deposit, a contract that authorizes the bank to own the money deposited with it and to deploy and use it in accordance with its professional activity with an obligation to return the same amount to the depositor and the refund shall be in the same type of currency.’[22] And that is exactly what Article 115 of the Jordanian Commercial Law stipulates in its first paragraph; stating that, ‘The bank that receives as a deposit a sum of money becomes its property, and it must return it with an equivalent value in one payment or in installments at the depositor’s first request, or according to the conditions, dates or prior notification specified in the contract,’[23] and this is similar to what is stipulated in Article 307 of the Lebanese Commercial Code as well.[24] Articles 414 and 416 of the Qatar Commercial Law[25] provide similar concepts and rules stating that the ownership of the deposited money shifts from the hands of the current account holder to the bank. Article 992 of the UAE civil code stipulates that ‘If the property bailed (deposited) is a sum of money or a thing which can be destroyed by use and the depositor permits the depository to use it, it shall be regarded as a contract of loan.’[26] And similar conceptualization can be found in the Syrian Law in Article 402, and the Libyan Law in Article 232. The Algerian legislator set a definition of the deposit in the Civil Code (1975), similar to other Arab legislations, Article 590 stipulates that ‘a deposit is a contract whereby the depositor delivers something transferred to the depositor, provided that he maintains and safe keeps it for a period of time.’[27] However, Article 598 of the Algerian Civil Code, which explores types of deposits, states that ‘if the deposit is a sum of money, or something else that is consumed and the depositor is authorized to use it, the contract is considered a loan.’[28] Now the Algerian Money and Credit Law of 2003, defines banking operations according to Article 66 as following ‘Banking operations include receiving money from the public and loan operations, as well as providing and managing means of payment.’[29] Furthermore, Article 67 states ‘Money received from the public is considered money received from others, especially in the form of deposits with the right to use them for the account of the recipient, provided they are returned.’[30] Unsurprisingly, the Algerian legislator’s definition of money deposits is largely similar to the aforementioned French law. 2.4. Contemporary Islamic financial jurisprudence opinion: The overwhelming majority of modern jurists and scholars identify the demand deposit as a loan contract,[31] which was approved by the Council of the International Islamic Fiqh (jurisprudence). The council declared in its 9th session in Abu Dhabi, United Arab Emirates, that: Demand deposits (current accounts) whether at Islamic banks or conventional (usury-based) banks, are considered as loans in the Sharia perspective, since the bank receiving these deposits is answerable for their safety and is Sharia bound to returning them on call. The ruling applicable to the loan is not affected by the bank’s (borrower) solvency or otherwise.[32] Proponents of this characterization put forward two main arguments: The current account, even if it is called a deposit, is in fact a loan. Because the meaning of the loan is verified in it: as the bank owns the money deposited in the current account, and has the right to use it, with the obligation of returning a similar amount upon demand, and this is the meaning of the loan, this is in contrast to the deposit in the fiqh terminology, which is money that is placed with a person for the purpose of preservation, with no right to use it, and an obligation to return it ‘the particular deposited good’ to its owner. And the jurisprudence ‘fiqh’ rule says “The essence of the contract is based on the purposes and meanings, not the words and premises.” The bank is a guarantor ‘responsible’ of the amounts deposited in current accounts if they are damaged or lost, whether that was due to negligence or not, which is in accordance with the loan contract. This is unlike the deposit from the jurisprudential point of view, as it is a trusteeship or custody, the depository does not guarantee it except in case of infringement or negligence.[33] 3. Discussion of the characterization of the demand deposit account: I must draw the attention to the fact that this discussion (and the article in its entirety) deals with the demand deposit (current account) and not the other types of deposit contracts (time deposit and all its subtypes). In addition to that, keep in mind that both conventional and Islamic banks operate under the fractional reserve system (they do not keep 100% reserves), which is relevant to the ensuing discussion. All today’s legal systems and the majority of jurists consider the current account (demand deposit) as a loan contract, as displayed in the previous part of this article, and in an effort to challenge this characterization, this part of the research paper will discuss this conceptualization by providing solid arguments from economic and legal perspectives, as well as the Islamic jurisprudence viewpoint. First, we can all agree that there is an objective nature of legal concepts such as “deposit”, “loan” and “property.” Hence the essence of loan and deposit exists independently of subjective interpretations. It is very important to draw the attention to the fact that the debtor-creditor characterization adopted by all legislations and legal systems contradicts many aspects of the debtor-creditor covenant. Evidently, the bank cannot be obliged to seek out its creditor, or to

Presence of 1/f noise in the temporal structure of psychoacoustic parameters of natural and urban sounds.

1/f noise or pink noise, which has been shown to be universal in nature, has also been observed in the temporal envelope of music, speech, and environmental sound. Moreover, the slope of the spectral density of the temporal envelope of music has been shown to correlate well to its pleasing, dull, or chaotic character. In this paper, the temporal structure of a number of instantaneous psychoacoustic parameters of environmental sound is examined in order to investigate whether a 1/f temporal structure appears in various types of sound that are generally preferred by people in everyday life. The results show, to some extent, that different categories of environmental sounds have different temporal structure characteristics. Only a number of urban sounds considered and birdsong, generally, exhibit 1/f behavior on short to medium duration time scales, i.e., from 0.1 s to 10 s, in instantaneous loudness and sharpness, whereas a more chaotic variation is found in birdsong at longer time scales, i.e., of 10 s-200 s. The other sound categories considered exhibit random or monotonic variations in the different time scales. In general, this study shows that a 1/f temporal structure is not necessarily present in environmental sounds that are commonly perceived as pleasant

NevusCheck: A Dysplastic Nevi Detection Model Using Convolutional Neural Networks †

Dysplastic nevi are skin lesions that have distinctive clinical features and are considered risk markers for the development of melanoma, the deadliest type of skin cancer. A specific deep learning technique to identify diseases is convolutional neural networks (CNNs) because of their great capacity to extract features and classify objects. Therefore, the research aims to develop a model to diagnose dysplastic nevi using a deep learning network whose classification is based on the pre-trained architecture EfficientNet-B7, which was selected for its high classification accuracy and low computational complexity. As for the results obtained, an accuracy of 78.33% was achieved in the classification model. Also, the degree of similarity between the detection by a dermatology expert and the proposed model reached an accuracy of 79.69%.ODS 4: Educación de calidadODS 3: Salud y bienestarODS 5: Igualdad de géner

Modelo de páginas amarillas de expertos en las instituciones públicas basado en los enfoques de la gestión del conocimiento

La investigación se contextualiza en el desarrollo de un modelo de páginas amarillas de expertos, circunscrito a un conjunto de modelos existentes en la gestión del conocimiento que fueron suscritos por diferentes autores, que tiene la finalidad de localizar e identificar en primera instancia el conocimiento experto que deberá transferirse a todos los equipos de trabajo pertenecientes a una institución del sector público. A través de un pensamiento sistémico, la investigación propone un modelo que fue validado por un conjunto de instituciones del sector público que gestionan proyectos con el rol de gestor y ejecutor. En segunda instancia, se identificaron los coeficientes de competencias de los expertos de cada institución pública que presentaban en su acervo profesional trayectoria y dominio avanzado de una temática de interés para asociarlo en un entorno de demanda de conocimientos específicos con participantes altamente activos y motivados por aprender y solucionar problemas que confluyen en una comunidad de aprendizaje sostenible. Posteriormente, se propuso la arquitectura del software de una página amarilla de experto bajo el enfoque de una taxonomía que permitirá identificar los componentes primarios que soportará la localización, identificación y transferencia del conocimiento experto a nivel institucional. Tomando como referencia lo antes señalado, podemos concluir que las páginas amarillas de expertos influyen significativamente en la localización e identificación del conocimiento experto para la resolución de los problemas específicos que se pueden adscribir a las instituciones públicas del Perú. Esta investigación coadyuva con el objetivo de la Política Nacional de Modernización de la Gestión Pública al 2021

Incomplete Information Pursuit-Evasion Games with Applications to Spacecraft Rendezvous and Missile Defense

Pursuit-evasion games reside at the intersection of game theory and optimal control theory. They are often referred to as differential games because the dynamics of the relative system are modeled by the pursuer and evader differential equations of motion. Pursuit-evasion games diverge from traditional optimal control problems due to the participation of multiple intelligent agents with conflicting goals. Individual goals of each agent are defined through multiple cost functions and determine how each player will behave throughout the game. The optimal performance of each player is dependent upon how much knowledge they have about themselves, their opponent, and the system. Complete information games represent the ideal case in which each player can truly play optimally because all pertinent information about the game is readily available to each player. Player performance in a pursuit-evasion game greatly diminishes as information availability moves further from the ideal case and approaches the most realistic scenarios. Methods to maintain satisfactory performance in the presence of incomplete, imperfect, and uncertain information games is very desirable due to the application of optimal pursuit-evasion solutions to high-risk missions including spacecraft rendezvous and missile interception. Behavior learning techniques can be used to estimate the strategy of an opponent and augment the pursuit-evasion game into a one-sided optimal control problem. The application of behavior learning is identified in final-time-fixed, in finite-horizon, and final-time-free situations. A twostep dynamic inversion process is presented to fit systems with nonlinear kinematics and dynamics into the behavior learning framework for continuous, linear-quadratic games. These techniques are applied to minimum-time, spacecraft reorientation, and missile interception examples to illustrate the advantage of these techniques in real-world applications when essential information is unavailable

Satisfacción del usuario en relación a calidad de atención. Servicio de Odontología del Centro de salud Pueblo Nuevo. Junio 2108.

Objetivos: Conocer la relación entre Satisfacción del usuario con la calidad de atención Servicio de Odontología del Centro de salud Pueblo Nuevo. Junio 2108. Materiales y métodos: Es un estudio con diseño descriptivo correlacional la muestra intencional, la cual estará constituida por 74 usuarios que asisten al servicio de odontología en el centro de salud “pueblo nuevo”, junio 2018. Para estimar la entidad entre la calidad de los servicios de salud y el nivel de satisfacción del usuario externo que acude a la prestación de servicio odontología la estrategia a usar será la encuesta SERVQUAL. Resultados: Los resultados obtenidos en la correlación reflejan que existe una relación positiva de 0,494 entre la satisfacción del usuario y calidad de atención; es decir a un buen nivel de satisfacción del usuario le corresponde un bien nivel de calidad de atención en el servicio de odontología, en el centro de salud de Pueblo Nuevo, 2018. Conclusiones: En base a los datos recogidos en la investigación se ha logrado Determinar un coeficiente de correlación Rho de Spearman de 0,494, que indica que existe relación significativa que entre la satisfacción del usuario y la calidad de atención en el servicio de Odontología del Centro de Salud pueblo nuevo, Junio 2018. Es decir que a un buen nivel de satisfacción del usuario le corresponde un buen nivel de la calidad de atención que se les brinda a los usuarios que acuden al establecimiento de salud