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Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

greatdemocracyinitiative.org

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Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#91

Post by burntbridge »

closeparen wrote: post #31
RobertoG wrote: post #4

This is an interesting proposal. Private banks have two very important functions in society: they provide the infrastructure for the payment system and they control credit. This proposal would disentangle those functions making, I think, a more robust financial infrastructure. The payment system is, by its characteristics, a natural monopoly, and it's so important that makes sense that it become public. If that was t…

Customers expect to have use the of the money they deposit with you, so once you take deposits you are the payment system. “Robust banking system” is inherently tied to reserve ratios, or having the deposits on hand to cover the loans you’re writing. A bank that only writes loans and doesn’t have deposits is the opposite of robust. If any bank gets to do this it would be the central bank. Payment facilitation is less…

Just to clarify, most central banks do not have reserve requirements. In the U.S. the reserve ratio is 0% so it doesn't have one either.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#92

Post by jcbrand »

smabie wrote: post #71
abfan1127 wrote: post #6

this seems like the wrong direction. I'd prefer to get rid of the Fed. No reason for the Federal Govt to borrow money it can print itself. Opening up what it means to be a bank makes sense though.

Simply printing money only expands the monetary supply, it can never contract it. Government bonds on the other hand have the nice property that they can be used to contract the money supply (by selling bonds) or expand it (by buying back bonds). Also, modern financial theory is predicated on a nominally positive risk free rate. If the nominal time value of money is strictly zero, a lot of things start to break down.

According to my understanding of MMT, you'd use taxes to shrink the money supply.

Also, risk free interest rates are negative in Europe, let alone zero.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#93

Post by andylynch »

The Bank of England used to do this to some extent - it was only four years ago that they closed these, which were available to government departments, companies and employees. They concluded that these customers would better served by conventional and online banking services, and that their resources were better spent on their main purpose.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#94

Post by andylynch »

Qworg wrote: post #84
DobryMorozov wrote: post #83

So who would be making consumer and commercial loans under this model?

In these proposals (which with the new CBDC furor going on are more common again), it would look a lot like China. The central bank would pick the "Agriculture Bank" or the "Industrial Bank", and hand over a set of deposits to enable loans. Hardly a model for success.

We used to have these in New Zealand but they didn’t succeed long term. Another model which does if well run is banking coops eg the Dutch Rabobank

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#95

Post by ateng »

andylynch wrote: post #93

The Bank of England used to do this to some extent - it was only four years ago that they closed these, which were available to government departments, companies and employees. They concluded that these customers would better served by conventional and online banking services, and that their resources were better spent on their main purpose.

Didn’t know they closed this! When I was a potential graduate scheme entree for BoE, one of the perks they emphasise is the ability to pay others with a Bank of England cheque, which, according to the guide, is a fantastic way to start a conversation.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#96

Post by noxer »

People who thing this is a good idea do not understand how our money works. A central bank isn't a bank at all it does not have the function of a bank. It just has bank in its name. If you let banks compete against a central banks you may as well just close them all.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#97

Post by guerby »

andylynch wrote: post #93

The Bank of England used to do this to some extent - it was only four years ago that they closed these, which were available to government departments, companies and employees. They concluded that these customers would better served by conventional and online banking services, and that their resources were better spent on their main purpose.

Same in France, I had one as son of a government employee. I even used it to cash USD checks from my internship in NYC circa 1995. A few years later all those accounts were closed and users were told to open a new account in a regular private bank.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#98

Post by jl2718 »

noxer wrote: post #96

People who thing this is a good idea do not understand how our money works. A central bank isn't a bank at all it does not have the function of a bank. It just has bank in its name. If you let banks compete against a central banks you may as well just close them all.

No, because you’d get no interest on your deposits. Private banks would simply have to offer something of value. obviously this conflicts with ZIRP, but that’s of dubious wisdom from the start.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#99

Post by jl2718 »

koolba wrote: post #70
MrsHippy wrote: post #34

The next step would be allowing citizens to vote directly on the laws that govern central bank policy.

There isn’t much I can think that’s stupider than direct democracy for monetary policy.

Perhaps oligopoly for monetary policy?

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#100

Post by jl2718 »

Animats wrote: post #63

Imagine trying to reach customer service. The US had "postal banking" from 1911 to 1967, but it was all paper based.

TreasuryDirect is already a thing. There wouldn’t be much service. It’s just a store of value and FedACH. Maybe password reset.
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