A democratic public banking service

The Great Recession of 2008-9 highlighted the key role of the banks in the national and international economy and placed them at the centre of public debate.

The possibility of the banking system collapsing along with the rest of the economy was posed by the crisis, forcing everyone to recognise that the banks pose “a systemic risk” to the whole of society, or as it became popularly known, that the banks are just “too big to fail”. In the light of this, there is an obvious and powerful case for the banking sector to be taken into democratically-run public ownership in order to maintain the stability of the economy.

Moreover, there are equal if not more important reasons for transforming the private banks and the rest of the financial sector into a democratic public banking service. Among many things, such a service could:

• Bring a halt to the eviction of people from their homes and businesses, and help them start to rebuild their lives.

• Become an essential source for the investment and sustainable growth urgently needed as part of a democratic plan for economic development.

• Provide the transparent and accountable system required to bring an end to the massive corruption, money laundering and tax evasion that is undermining the economy, government finances and the political system.

• End the bank frauds – the mis-selling of financial products, and the insider fixing of financial and currency markets which are cheating bank customers – along with the big bonuses, commissions and incentives that encourage this fraudulent culture.

• Deliver much cheaper services for account holders, lower interest rates on loans and credit card charges (including cheap public credit cards), plus special assistance for individuals and small businesses to help them to manage their finances and develop their plans and innovate.

• Make regulation work properly by introducing democracy and transparency into the whole central bank and regulatory framework, thus finally answering the question ‘who regulates the regulators’?

From the Campaign for a Democratic Public Banking Service.

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