The “Private Banking Apologist” Weekend Challenge

Yes it is back !.

Last weekend saw some reliable ‘go to’ private banking enthusiasts plunge in and splash around at the shallow end of the pool but with few useful contributions.

Some contestants decided that complaining about:

* trick questions
* a priori falsehoods
* multivariate answers

was easier than just answering the question. Some even decided they would write their own questions and cut and paste the answers from their Hallmark scrap book of “Sayings for important occasions”

Something about explaining the case in support of the role of private banks in the public monetary system was just too much for them. Hopefully, after a few good sleeps, sensible eating and a dash of courage we might see some better efforts this week.


Here is the question again.

What is the case in support of giving specific private profit making companies a critical role at the centre of our public monetary system.

Or to put it another way.

When the creation of public money is a mere matter of key strokes or printing some paper or minting some coins why do we license a special category of profit seeking private organisation to perform a central role in the process?

To help contestants here are some useful links that might help their deliberations.

First up something from the Bank for International Settlements (BIS) “Money in the digital age: what role for central banks?” H/T Cee

This should be very helpful for the cut and paste style apologist because as the major international apologist for private banking the BIS is a safe bet for producing material that keeps the private banks right where they want to be…at the centre of the monetary system.

To provide contrast here again are those interesting comments from the Centre Bank of Norway last year that drive fear into the tiny musty hearts of private bank apologists across the globe.

Tip: Unsurprisingly, the BIS make no mention of this as an option.

“…One alternative currently being discussed is the introduction of electronic central bank money. There are several ways of achieving this: consumers can have an account either at the central bank itself or in a system controlled by the central bank. Another possible solution is for Norges Bank to issue a payment card or develop an app for consumers to use for anonymous payments.

Which brings us to another question: which means of payment should be the statutory form of legal tender in Norway if we introduce electronic central bank money? Should it be banknotes and coins, or Norges Bank’s electronic money, or both?

We must also ask ourselves what the consequences will be for the banking system. For many consumers, electronic central bank money could provide an alternative to deposit money in a bank, as cash does today. Banks can attract deposits through the interest rates they offer. But their ability to create money and extend credit could nonetheless be affected, especially if this new form of electronic money enters into widespread use….”


Categories: Macrobusiness

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