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No more too big to fail!

Banking must change! Since the crisis in 2008 we have been talking about it. But no real changes were made. We only created more financial control on banks (by Basel). Government bought the banks an now they are selling the shares again because the stock markets are growing again Risks are over, back to the old situation, banks and their grey suits are happy. But that’s not a solution, it’s just waiting for the next crisis, the next bail-out and we “the taxpayers” have to help banks again. They are too big to fail again.

“So what’s it gonna be boy?” As Arno Boot from Sustainable Finance Lab says we have to arrange measures that when a bank seems to fail  savings of their customers must be save by creating a subsidiary within banks for the savings of their customers also known as ” the taxpayer”. All the accounts and saving go to a kind of national bank for the time being and that (national) bank controls the savings and payments part of the bank that’s going to fail. The risky and business parts of the bank with shareholders can go bankrupt, while all the financial processing across bank accounts can continue under control of the national bank or a temporarily deposit or guardian bank. So first step should be the unlocking of the payments process within banks and move this to an external organisation like Adyen or create a national or international (European) platform under control of national bank or ECB. By doing this or something similar we reach a moment that banks are no longer too big to fail, because the payments process was made external and the savings part  is secured under control by the national bank.

In the meantime banks can improve their business. At the moment saving of you and me are used by the bank to invest in shares of companies they choose (and which you might not do, because you don’t like the goal of that organization).  So banks could start by creating more tranaparency in this process and ask for your input. Also the level of risk must be the one you choose with more options for green and social benefit. In combination with the guarantee on our saving till 100K this can be a good start for new business.

Besides this the business part of the bank can start her own new activities with attracting new capital for new investment with normal risk for shareholders without using savings of customers. This also can define some risk levels which companies or the bank can choose, but when it fails only this business part of the bank will go down and the savings of our money is and remains save.

Hopefully banks see or feel the need to start this process of unlocking savings and payments so that the business banks become a normal business no longer too big to fail.