Narrow banks just reflect narrow minds
Sir, as the confusion that reigns in the financial world grows more people will hang their hopes on the alternative of “Narrow banking” which by restricting some banks to hold only liquid and safe government bonds is supposed to provide us a super-duper safe bank.
Let me sincerely doubt that just because we already show so much faith in governments and politicians accepting their currency based on their implicit well behaviour we are to be much safer by depositing those funds back with the same governments and politicians.
In the current bank regulations that emanated from Basel little is spoken about the almost conspiratorial subsidies to public debt that have been created by requiring so little bank capital to be held against it and that thereby also signals that the public debt does not carry risks. With such behaviours how surprised should we be seeing the current levels of public debt growing and growing… until the true reality of risk catches up?
Let me sincerely doubt that just because we already show so much faith in governments and politicians accepting their currency based on their implicit well behaviour we are to be much safer by depositing those funds back with the same governments and politicians.
In the current bank regulations that emanated from Basel little is spoken about the almost conspiratorial subsidies to public debt that have been created by requiring so little bank capital to be held against it and that thereby also signals that the public debt does not carry risks. With such behaviours how surprised should we be seeing the current levels of public debt growing and growing… until the true reality of risk catches up?
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