The economic emergency in recent months has brought this issue on many lips: "Should we nationalize the banks? . If liquidity problems can be managed by a single central bank intervention in expanding their lines of credit, credit problems, they can not be solved by an injection of capital. Now that will invest money in a business that failed miserably? Nobody, apart from the state. Number of state have invested in their banks and took a role or not in their direction. A sort of hybrid model linking governments formerly reckless newly statist discourse and irresponsible management is taking the reins of global finance. The public sector is still far from being qualified to lead large banks. The pathetic failure of Credit Lyonnais and the investment policy strongly inspired by the orders of the state of Japanese banks in the 80's are there to remind us.
In this strange situation will emerge in the coming years the financial world of tomorrow. Reflection in these troubled times out our future banking model.
We know that. The allocation of financial resources plays a role in the economy of a country. They go according to productive or unproductive sectors, the health of an economy depends on it. We saw during the last thirty years a tremendous concentration of banking in most major industrialized countries (More in Europe, especially France and the United States). There is no denying that the crisis has exacerbated this situation and only a few major players are present. So a huge part of the economic salvation of our country is held a few hands. Who are these people? Do they have the skills to carry out the investment policy which our economy depends? We do know little or not. The opacity with total reign over those who have much of our economic salvation in their hands
The justification for a private banking sector joined the free market in general. Those who make the right investments to survive, others disappear. Thus the area is becoming more efficient and better and better allocate resources. What about that today? The mere failure of investment bank Lehman Brothers has completely paralyzed the entire interbank lending market and almost lead to a financial disaster without massive intervention by the state. One can say without much hesitation in coming decades, few governments take the risk of letting one of their big banks fail. This is the famous "too big to fail" aggravated by recent mergers and acquisitions bank.
The situation is well understood: the pooling of losses and privatizing gains. The situation is in itself morally and economically unsustainable. Banks whose managements have proved their failure will survive and only the direction, in the best case, be replaced. Many of them have invested heavily and knowingly in unproductive nature of speculative bubbles in search of quick profits. Many of them yet retain a similar structure to emerge from this crisis.
The banking sector in this form can not be no justification. They do not represent the public interest but the interest of shareholders and their management. Yet a bad investment policy is not sanctioned by the disappearance but by massive aid from the state allowing the bank to survive.
The model is rotting from the inside. A healthy economy can emerge from such a system. Go back to the very principles of capitalism. Healthy banks need to survive, insolvent banks, to disappear. This is possible only if the bankruptcy or a few banks can not by themselves undermine the economic system as a whole. This is possible only if banks have a limited size. This can be calculated for example in relation to the size of the liabilities of each bank. This may seem unrealistic given the current situation: the banking sector has never been concentrated. What have we gained from this merger? The enormous size of the banks would allow optimal diversification of investments and thus reduce the risk of bankruptcy. Many banks have instead taken risks to the extent of their gigantism. The enormous size of banks is intended to allow to fund huge investments to large enterprises. With the financial disintermediation, huge investments can be financed without the help of a great institution.
Nothing, absolutely nothing justifies such a concentration of banking. The spray will not be easy. But it is a necessary task.
In the model Allais / Fisher wilderness we stand here, banks of deposit and loan banks would be separated. Since banks deposit would keep all money deposited in the bank, the risk of failure would be extremely limited. So all of these deposits could be guaranteed by the state. Bank lending and investment they have a size limit determined by size of liabilities. Applicants would be informed of possible returns and risks and deposit their money knowingly. In case of bankruptcy due to a solvency problem, the bank simply disappear. Depositors would be compensated to the tune of amounts recoverable and businesses dependent on bank financing of this sustained for some time.
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