Return to A viable solution?

Banking Regulation

Banking separated between high-street operation and investor trading as per updated Glass Steagall. Provision made that this can never again be reversed, unless it is to be replaced with stronger regulation.

Usury and all compound interest banned, anything above 1% is usury. Banks can charge a maximum of 10% of loan as setup charge, which can be added to loan amount. Banks can charge reasonable amounts for normal banking services, such as current accounts, money transfers, cheque books, debit cards, currency transfers, overdraft (up to 1%) and other strictly ethical operations, but only under strict rules of full disclosure and transparency and authorisation of customers. Debts cannot be transferred to any other agency without notarised authorisation of customer.

If a high street bank fails, customer’s deposits are secured (up to £100,000 per account), all debts to that bank would be cancelled, and the bank would be taken into public control, its executives sacked with no compensation, and if appropriate prosecuted (assuming there was criminal activity).

Investment banking sector has no financial protection from the State under any circumstances, if they fail, they fail, and would never again be bailed out.

Banks required to hold a minimum of 50% of deposits, fractional reserve multiplier of 2 maximum. Deposits on account worth double the nominal amount for payment of bills and debts. Removal of deposits only at nominal value.

All depositors’ money guaranteed up to £100,000.

Bank of England abolished and function made part of public treasury (public central bank) if such establishments were to exist. Treasury can create money (physical or digital watermarked) to the value of UK fixed and variable assets, provision for more if necessary. Role of governors and trustee’s fully investigated and dealt with appropriately. Board of treasury, economic SME’s control functions of pubic central bank, with full disclosure, transparency and accountability.

Credit cards can exist, but they would be subjected to much more stringent control, to both lender and customer. Subject to full disclosure and transparency, interest up to 5% maximum could be charged, as well as late payment charges, but only under exceptional and reasonable conditions.

Any chief executive (not just banks) earning more than £200,000 (including bonuses, share options etc.), will effectively be taxed at 50% above that rate, however their role could attract funded house, vehicle, City apartment and other benefits, but these must be fully disclosed and transparent.

All existing debts will be cancelled, a long overdue debt jubilee. All debtors allowed to pursue repayment of all existing loans principle and interest paid, if their loans are found to be in any way fraudulent (almost all). This only applies to existing loans. Although anyone can attempt to pursue previous fraudulent loans retrospectively.

Any loan can be guaranteed up to a value based on the lendee’s net worth, based on £100,000 per year per person and homes nett worth of £250,000. The banks responsibility is to assess the customers’ ability to pay, as it always should have been.

The premise is to encourage and enforce truly ethical banking, the banking sector can still make reasonable (although reduced) profits, but for the high street operation there are very strict controls on their operation and there is no incentive for executives to be paid astronomical salaries and bonuses. Investment bankers on the other hand are free to operate as they choose, with only their own money and carrying ALL the risk. Trading could still exist on stocks and shares in PLCs, but they would not be able to influence currency rates, gold, oil and other commodity prices. The health of countries economy would not be tied to the vagaries of the London Stock Exchange, or NYSE.

Encourage, promote and incentivise alternative systems such as credit unions, co-operative banking, regional currencies, LETS and TAMS, protect them from commercial banking interests and monopolisation.

Break up large commercial banks to promote more competition. Set up a national bank, or expand post office banking type operation. Permanent end to the idea of Too Big To Fail (TBTF) Banks.

Banking should encourage savings and offer incentives for savers, interest on savings based on amount saved and agreement to leave money in accounts.

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