A guest post by John Nugée – Ever expanding regulation will not reinstate good behaviors in the world of finance. To the contrary, more and more rules bear the risk that banking becomes a business without any moral basis at all. It is time to reflect about what went wrong and explore new ways to fix finance.
A year-end is always a good time for reflection. And as 2015 draws to a close, it is an opportunity, after a year of considerable central bank activity which culminated in a US interest rate increase, to reflect on the state of the global banking system.
Fintech companies can bring our financial system to the next level – but only if they disrupt finance on the regulatory level as well. Here is how they should proceed.
Only a couple of years ago, Fintech entrepreneurs wanted to become a disruptive force. Ambitious startups had the vision to democratize finance and break the power of banks. About five years ago, Renaud Laplanche, CEO of Lending Club, hoped companies like his could eventually replace traditional banks.
We are proud that The End of Banking has been selected as one of the ten Best Fintech Books. You find the full list at the website of Fintech Singapore.
Regulators came up with a long list of contributing factors to the financial crisis of 2007-08. But what if all these factors are only symptoms of one underlying, much more fundamental issue?
In this article, we want to draw your attention to a seemingly small flaw in the design of our economic architecture. One that did not matter for a long time, but that has become extremely destructive over the past decades. The most recent banking crisis is a direct consequence of this flaw, and if we do not deal with it, we will have to live with an increasingly fragile financial system. The issue we are talking about has been hard coded in an underestimated but critical component of our economy’s operating system: Limited Liability.
We are pleased to announce that The End of Banking has been honored with a Book of the Year award by Foreword Reviews – time for us to look back on the past 10 months since publication.
What has started in a London Pub four years ago has reached another major goal. The End of Banking has been honored with a Book of the Year award by Foreword Reviews. For us, this was another great step forward. We are happy to look back on the past 10 months, which have offered many highlights.
Let us revamp what has happened since publication.
We all have become deeply accustomed to the fact that banks are among the most profitable companies. Many perceive the success of banking as something magic. In fact, it is based on a surprisingly simple trick.
Why is Apple among the most profitable companies on this planet? The answer is simple: Apple sells popular products. Some people might have difficulties to understand the religious zeal of Apple customers, but even Apple skeptics can easily understand why Apple is one of the most successful companies on this planet.
Recent developments in finance challenge regulators around the world. Fintech companies are on the rise, and it is not clear what kind of new rules are needed. To shed light on these issues, one of the authors behind Jonathan McMillan gave a speech at the GovKnow conference on “The Future of Financial Services – Governance, Regulation and Accountability” in London.
First of all, I’d like to thank you for this opportunity to discuss some perspectives on financial regulation in the digital age. In my view, this is a topic that has not yet received the attention it deserves. So let’s get right into it.
The End of Banking discusses abstract concepts such as information asymmetries, systemic stability, or money creation. Sure, these concepts are critical for our argument to end banking. But there are also very tangible reasons for a world without banks that are just as important.
In The End of Banking, we describe how a financial system without banking can work. We show how life for both borrowers and lenders will improve, and how it will be better in supporting the real economy with credit. In this short blog post, we want to discuss a key feature of a financial system without banking: the absolute transparency and accountability you have as a saver.
Is there a better way to explain the Eurozone crisis than with Greek Mythology? Probably not, as Odysseus’ choice between Scylla and Charybdis offers a particularly neat analogy for the current situation in Europe.
“To choose between Scylla and Charybdis” means to choose between two very bad options. The two main options crystalizing from the never-ending Eurozone crisis has been debt-relief or austerity measures. Mainstream economists from the Anglo-Saxon countries predominantly advocate another generous bailout program for Greece paired with debt relief.
Let’s call this option Scylla.