Merton Miller backed full reserve banking.

Merton Miller, economics Nobel Laureate and co-author of the Modigliani Miller theory backed full reserve banking. Here are the final few sentences of his paper “Do the M&M propositions apply to banks?” (Journal of Banking and Finance).

“Why not just scrap the whole costly system of deposit insurance, capital requirements plus risk surveillance in favor of a variant on Irving Fisher's 100 percent money proposal, under which insured deposits - and no limitation need be placed on the size of the accounts - must be invested only in short term Treasury bills or their close equivalents? That will surely guarantee the safety of the payment system and head off any future taxpayer bailouts. Small and medium-size businesses won't thereby lose access to bank financing. Banks will simply raise the funds to support their loan portfolios by issuing non-guaranteed securities of any of a variety of kinds, like leasing companies or merchant banks now do, at rates reflecting each bank's risk posture more accurately than any feasible scheme of insurance premiums. The Fisher plan has other advantages as well, not least, preventing monetary meltdowns like those of 1930-33. That's why Fisher proposed it in the first place! And with that major worry removed from their shoulders, the monetary authorities can begin to take a more positive view of financial innovation and experimentation. But there's even more good news. Think how much national economic welfare could rise under Fisher's narrow banking scheme when thousands of no longer needed bank regulators (and hundreds of academic banking economists) find themselves forced at last to seek more socially productive lines of economic activity.”