This page states the problem the members found in the fractional reserve model each of them was operating: what a deposit is, and what stands behind it.
The identified problem
A deposit at a financial institution is a claim on that financial institution, and the financial institution pays the claim in a currency that is a claim on the nation.
Under the fractional reserve model, a financial institution lends money it creates: when a financial institution makes a loan, it credits the borrower's account with a new deposit, and the loan and the new money come into existence together.
The Bank of England stated the mechanism in 2014, and in the United Kingdom deposits created that way are 97 percent of the money the public holds (Bank of England, Quarterly Bulletin 2014 Q1, Money creation in the modern economy).
The deposit is not currency.
The deposit is the financial institution's promise to pay a client in currency on demand, and the financial institution does not hold the currency it promises to the client.
What stands behind that financial institution's promise cannot be measured on the day depositors call, and there are four layers to it.
- The financial institution's own assets
- Recorded on its books at what it paid for them: on 30 June 2026 the securities held by insured financial institutions in the United States were recorded 326.7 billion dollars above what those securities would have fetched in the market, and the 13.7 trillion dollars of loans on their books are priced by no market at all (FDIC Quarterly Banking Profile, second quarter 2026).
- The deposit insurance fund
- 157.4 billion dollars on 31 March 2026, which is 1.43 percent of the deposits it insures (FDIC Quarterly Banking Profile, first quarter 2026).
- The order of the line
- When a financial institution fails, the depositor who withdraws first is paid in full, and the depositor who comes last holds a certificate entitling him to whatever remains once the financial institution's estate has been distributed.
- The currency
- The currency in which the promise is paid, a note that has been redeemable in nothing since 15 August 1971 and is paid only with another note.
The national currency erodes while the promise stands.
One dollar of July 2016 bought 72.14 cents of goods in July 2026, a loss of 27.86 percent in ten years (Bureau of Labor Statistics, CPI-U, all items, July 2016 index 240.101, July 2026 index 332.813).
Over the same ten years the pound lost 29.60 percent of what it buys, the euro 24.51 percent and the yen 14.09 percent (Office for National Statistics; Eurostat; Statistics Bureau of Japan).
Every unit of new money a financial institution creates is spent from the same shelf as the units already held, so the holders of existing deposits pay for the financial institution's lending in what their deposits will buy.
The nation that stands behind the currency holds claims of its own.
On 28 August 2026 the official reserve assets of the United States were 253.7 billion dollars: 19.5 billion in securities issued by the euro area states and Japan, 18.8 billion in balances at foreign central banks, the Bank for International Settlements and the International Monetary Fund, 31.7 billion in the reserve position at the Fund, and 172.7 billion in special drawing rights (United States Treasury, U.S. International Reserve Position, 28 August 2026).
Every one of those lines is a claim on another nation. The one line that is not a claim is the gold, recorded at 11.0 billion dollars at the statutory value and worth 1,138.3 billion dollars at the 1 September 2026 price. Against those holdings stand 2,479.5 billion dollars of currency notes in circulation, 20,834.8 billion dollars of insured deposits and 40,112.5 billion dollars of federal debt (Federal Reserve H.6 and H.4.1; Treasury, Debt to the Penny, 1 September 2026).
On 16 May 2025, Moody's Ratings lowered the long-term rating of the United States from Aaa to Aa1, the last of the three major agencies to remove the highest rating, after Standard and Poor's on 5 August 2011 and Fitch Ratings on 1 August 2023.
| Layer behind one dollar of a financial institution's promise | What stands there | Can it be measured on the day depositors call |
|---|---|---|
| The financial institution's own assets | Securities recorded 326.7 billion dollars above their market value; 13.7 trillion dollars of loans priced by no market | No |
| The deposit insurance fund | 157.4 billion dollars, 1.43 percent of the deposits it insures | A fraction |
| The order of the line | Paid in full only to the depositor who withdraws first | Only for the first in line |
| The currency | A note redeemable in nothing since 15 August 1971, down 27.86 percent in ten years | No |
Table 1. The four layers behind one dollar of a financial institution's promise to its depositors. Sources: FDIC Quarterly Banking Profile, first and second quarters 2026; Bureau of Labor Statistics, CPI-U.
Why Alkaimi Ecosystem member financial institutions became concerned
A chartered financial institution answers for its solvency to its regulator, and under the fractional reserve model its solvency is a probability: the probability that its depositors will not withdraw their money on the same day.
The probability is not within the financial institution's control.
Deposits can be withdrawn electronically in minutes; a deposit the financial institution created by lending can be withdrawn on any day; and the financial institution obtains the money it lends by bidding for deposits at savings and certificate rates, by holding a reserve of cash and government securities against their withdrawal, and by paying the branches, the staff and the promotional rates that gather them.
The financial institution's own reserve is held in the currency that lost 27.86 percent in ten years, so the reserve erodes at the currency's pace whatever the financial institution does. The Moody's downgrade of 16 May 2025 and the debt-ceiling standoff of the same year showed that the credit of the nation behind the currency is itself judged and can be lowered.
Alkaimi Ecosystem™ member financial institutions became concerned because, under the fractional reserve model, one financial institution settles its obligations to another financial institution by transferring claims, in a currency that is a claim on the nation, so that at no point in the chain does a settlement end in anything that is not a promise.
The Alkaimi Ecosystem member financial institutions concluded that a settlement system built on promises alone is unstable by construction, and that the instability grows as the currency in which the promises are paid loses what it buys.
How the Alkaimi Ecosystem model resolved the problem
Under the 100% Whole Reserve™ model, the value a client brings to an Alkaimi Ecosystem member financial institution is not recorded as a deposit and does not become the financial institution's liability.
The value of a qualifying asset is recognized once, by Alkaimi™'s value recognition method, as whole value in a unit that references no currency, and is held in the member financial institution's custody on the Alkaimi Ecosystem's ledger.
The Alkaimi Ecosystem member financial institution holds custody, places no lien on the value, pledges the value to no one and creates no claim against the value. The client's holding is owed by no financial institution.
Settlement between two Alkaimi Ecosystem member financial institutions moves that value from one account to another on the Alkaimi Ecosystem's ledger and is final when the value moves. The obligation is extinguished at that instant, and nothing remains on either financial institution's books. There is no promise behind the holding for a depositor to call, and no order of the line, because there is no claim.
What the Alkaimi Ecosystem member financial institution still owes, its ordinary currency deposits and its obligations to the financial institutions with which it corresponds, it owes under the rules under which it has always operated.
What the Alkaimi Ecosystem member financial institution holds in custody on the value side, it does not owe at all. The Alkaimi Ecosystem member financial institution's own liabilities therefore shrink from promises to substance.
Why the Alkaimi model serves the ecosystem member financial institution over the long term
The Alkaimi Ecosystem member financial institution's balance sheet stops depending on a probability. Client value held in custody is outside the Alkaimi Ecosystem member financial institution's liabilities, outside the deposits on which deposit insurance is assessed and outside any run, because the member financial institution never owed it. The reserve the Alkaimi Ecosystem member financial institution holds as recognized whole value does not erode with any currency.
As the Alkaimi Ecosystem's ledger expands, one recognized asset at a time, the share of the Alkaimi Ecosystem member financial institution's business that stands on substance rises and the share that stands on promises falls, so the ecosystem member financial institution's exposure to the claims system falls with every year of operation. The gain does not depend on the interest earned on any loan; the gain is in the construction of the balance sheet itself.
Alkaimi Ecosystem member financial institutions found that the model answers the first of the five questions on which each was evaluated, what stands behind the financial institution's obligations to its depositors, with something a regulator can examine and a depositor cannot call: value held whole, in custody, owed to no one.
Sources
Bank of England, Quarterly Bulletin 2014 Q1, Money creation in the modern economy, McLeay, Radia and Thomas. United States Bureau of Labor Statistics, CPI-U, all items, July 2016 and July 2026. Office for National Statistics; Eurostat; Statistics Bureau of Japan, consumer price indices, July 2016 and July 2026. FDIC Quarterly Banking Profile, first quarter 2026 and second quarter 2026. United States Treasury, U.S. International Reserve Position, 28 August 2026. Federal Reserve Statistical Releases H.6 and H.4.1, July and September 2026. Treasury, Debt to the Penny, 1 September 2026. LBMA Gold Price PM, 1 September 2026. Moody's Ratings, rating action on the Government of the United States of America, 16 May 2025; Fitch Ratings, 1 August 2023; S&P Global Ratings, 5 August 2011. The Alkaimi Financial Ecosystem™ in Function, Granular Value on a Neutral Rail, Pegisai Global Holdings, Inc., released 22 August 2026, published on pegisai.com 5 September 2026.
Compliance statement
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