The Banking Royal Commission is still in full flight and doing a great job turning a spotlight on the rotten, murky and often crooked Australian banking system but one desperately needed reform is already clear and should be recommended as soon as possible.
Critical Reform No 1
Every Australian must have the freedom to open a deposit account at the Reserve Bank of Australia.
And giving them that freedom requires only one simple reform.
The public must be allowed to open and maintain a deposit account at the 100% safe and publicly owned Reserve Bank of Australia.
With that one reform Australians can vote with their feet and move some or all of their savings from private banks to the 100% guaranteed Reserve Bank of Australia.
Private Banks are allowed to have RBA accounts, so why allow the private banks to have access to supersafe 100% guaranteed RBA accounts but NOT the Australian public?
It is a disgraceful state of affairs and for most Australians it means they are forced to maintain a deposit account at risky private banks who, as the Royal Commission hearings have made clear, simply cannot be trusted not to engage in shady and crooked practices.
Why should the Australian public be forced to choose between a private bank account (or the mattress or back of the freezer) and risk have a private bank “mine” their private transaction data, selling it to their business partners or using the information to target them for sales campaigns and banker debt products.
If people want to use Private Banks for their savings that is a matter for them but why not give Australians a choice.
One simple reform:
One simple reform is required. Allow every Australian to open a “MyRBA” deposit account at the Reserve Bank of Australia.
There are many other good reasons to allow every Australian to open a “MyRBA” savings deposit account at the Reserve Bank of Australia.
- It is 100% guaranteed – unlike the private banks the RBA cannot go broke.
- Finally Australians fed up with the private banks can vote with their feet.
- If Australians wish to transfer money to another RBA deposit account they need not involve a private bank at all. In other words “Private Bank free banking”
- If private banks can have an account at the RBA every Australian should be able to.
- If the public have the option of a 100% safe account at the RBA there will be no need for the government to provide guarantees for deposits held at the risky Australian private banks.
- The “MyRBA” deposit accounts will be a lot more private than savings accounts at private banks which the banks currently ‘data mine’ so they can make money from selling information to their business ‘partners’.
- “MyRBA” deposit accounts will be available free of charge.
- If any transactions fees are charged for transactions over a certain amount per month they will be charged at cost.
- The RBA already regulates the payments system and thus providing access to automatic tellers and other means of accessing savings will not be difficult.
- Australian Post Offices can offer over the counter services to those who don’t wish to use websites or smart phones apps to access their accounts and complete transactionss
What about interest?
Initially deposit accounts at the “MyRBA” will pay no interest.
However, they will be 100% safe and charge no fees and very low transactions fees if any at all.
A “MyRBA” deposit account will be the 100% risk free saving option.
People who wish to take some risk and earn some return on their money can leave some or all of their savings in the private banks, buy shares or invest in productive businesses.
The government may decide that a small amount of interest – perhaps an amount equal to CPI will be paid by the RBA on “MyRBA” balances to ensure that the account balances are inflation adjusted. Naturally, if there is no inflation there is no need for a CPI adjustment.
Will the RBA lend out the deposits?
The RBA is not in the business of taking on the risk of lending money.
There are plenty of private, not for profit and other government agencies that are perfectly capable of assessing risk and lending money. If people wish to earn income from investing some of their savings in organisations that lend they can do so but that is not the job of the RBA.
One simple reform that the Banking Royal Commission has demonstrated is needed right now!
Every party running candidates in the next Federal Election should make allowing Australian to open a “MyRBA” deposit account at the RBA a core promise.