Issue Banks Certificates That Can Only Be Used To Lend

There might be a way to force banks to lend capital they receive. Bear with me as I am likely bundling stories from the Panic of 1907 with the 1929 Crash as I have recently read books on both from multiple authors.

Any way I think it was during the Panic of 1907 that cash became very scarce among the banks. There were many different types of banks back then so I am not sure I have the type of bank correct. Since there was a scarcity of cash the trust (I think Trusts) banking companies created a coupon like certificate that was like an IOU. This IOU was like its own currency equal to cash. Call it a coupon, call it what you will, but these IOU's sort of became a currency between the trust companies until cash was pumped into the system. These IOU / coupon like devices were basically equal to cash as they were backed by the government and the trust companies were able to function until the cash started to flow. These certificates were allowed to be included when calculating total capital.

Fast forward to the present. The Treasury can do something similar. The Treasury can issue special Tickets / coupons to banks that have the same exact value of cash but that could only be redeemed by the banks when the banks have borrowers lined up ready to borrow. These coupons would have no other purpose but for lending.

To recap: The Treasury can issue IOU / certificates to the banks that are equal to cash but can only be used to lend to borrowers. These coupons would serve no other function but to be issued by Treasury to banks and redeemed for cash by banks only for borrowing activities.

Of course the devil is in the details but since many ideas are getting floated it is hard to know what will get us out of this problem. Since the Treasury is in the dilemma of giving cash to banks and then watching them sit on it, this may help.