" limit financial speculation by requiring private banks to hold 100pc reserves against their deposits. "
Normally, banks aren't required to actually have the money they lend out, so when a loan is credited to your account that money is created (and when you repay the loan, the money is destroyed). In many countries banks are required to hold a certain amount reserve (I think it's about 1.5% in the USA - the UK doesn't have such a requirement), so this is simply requiring that the banks have 100%, which means banks can only lend money they actually have.
EDIT: Did you mean how does the whole money creation thing work at all? There's a very clear guide at:
" limit financial speculation by requiring private banks to hold 100pc reserves against their deposits. "
Normally, banks aren't required to actually have the money they lend out, so when a loan is credited to your account that money is created (and when you repay the loan, the money is destroyed). In many countries banks are required to hold a certain amount reserve (I think it's about 1.5% in the USA - the UK doesn't have such a requirement), so this is simply requiring that the banks have 100%, which means banks can only lend money they actually have.
EDIT: Did you mean how does the whole money creation thing work at all? There's a very clear guide at:
http://www.bankofengland.co.uk/publications/Documents/quarte...
It's for the UK, but pretty much all modern countries work in a similar way.