Part 2: What is to be done?

Proposals for banking reform

Written by Editors

The world has entered a new era, and there is no going back to Keynesian economics as such. However, we think that western countries need some kind of revised version of the Keynesian ideas.

Banking that invests in the real economy should be supported

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Nowadays it is necessary to support banking activities that are non-speculative and concentrate on financing national industrial production and other economic processes. In this, it is important to pay attention also to environmental issues.

Local banking should be supported

There are more and more areas that have lost their industrial and economic foundation due to globalisation. Their basic social structures are breaking up. These areas can be helped by setting up banks under the supervision of democratically elected local authorities. There are many examples of such banks all over the world.

At the same time, it is necessary to go back to the goals of the French Revolution, still visible on the map of the country’s municipalities: basic political units should be relatively small. The creation of larger administrative units may be justified by reasonable arguments, but along with centralisation, efforts should be made to return to relatively small ”village and township parliaments”.

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Law is order, and good law is good order.

Experiments in banking should be encouraged

‘Experiments in banking’ means, for example, Islamic finance and socially controlled micro-loans in various forms. In what forms? This is a question that needs both discussion and experimentation.

Islamic banking [1] is known for the fact that there is no interest on loans granted by the bank. The bank and the customer share the risks as well as the wins. Hence, they are more equal than in the western banking system. The most speculative investments are forbidden in Islamic banking.

Socially controlled micro-loans are suitable for financing small businesses. We believe them to be effective in fighting back problems such as unemployment and social exclusion. When a bank grants micro-loans locally, the  principle of rewarding for truthfulness can also be taken into use.

The possibilities of currencies that are not dependent on states or central banks must be examined. Legislation must be developed so that they can be used legally and in a regulated way.

Experimenting is to be encouraged, but at first on a small scale and with moderation.

REFERENCES

[1] Naturally, this is not an argument for the Sharia law. We focus here on some specific features of  Islamic banking. Especially after the financial crisis in 2008, many Islamic banks have been opened in European countries, and their idea has been studied at western universities. One of these studies is a master’s thesis completed at Aalto University (Finland) in 2012. 

OUR VIEW: Humanity first! Towards an ethical civilization.

PART 2. WHAT IS TO BE DONE?

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