The Greek tragedy would not have happened under full reserve banking.

Under full reserve, anyone wanting interest from their bank, i.e. anyone who wants their bank to lend on their money, is deemed (quite correctly) to be a money lender. That is, they are into commerce. And there is a widely accepted principle that while entering into commerce is thoroughly laudable, it is not the job of taxpayers to come to the rescue of commercial ventures which fail.

That principle is adhered to under full reserve, in contrast to the existing bank system which basks in the delusion that money which has been loaned on is totally safe.

Moreover, under most versions of full reserve (certainly under Laurence Kotlikoff’s), depositors can CHOOSE what sort of borrowers get their money: that is, depositors have a choice between for example funding mortgagors with plenty of equity in their houses, or NINJA mortgages, or loans to Greece (which has a long history of not repaying debts) so as to enable Greece to buy German built submarines, and so on.

Under full reserve, precious few depositors would have chosen to lend to Greece (or Argentina, come to that). In contrast, under the existing system, Euro banks assume the ECB will come to their rescue however silly their loans. So why not lend like there’s no tomorrow?

Of course the above “full reserve treatment” for Greece would probably not have meant Greece escaping austerity entirely. But at least austerity in a relatively mild form would have kicked in earlier, and remained relatively mild, which in turn might have meant that by now (2018) the whole Greek mess might have been solved.