Banks as public institutions of the community and abolition of the interest rate system and stock exchange transactions:
Even before the onset of the 2008/9 global financial and economic crisis, there were frequent calls for appropriate international oversight and supervision of international financial products and international financial transactions. Speculative financial instruments must be withdrawn from the market and tax havens must be formally declared illegal or be shut down. In addition, in the medium term so called existential goods to be granted protection in a reformed charter of human rights, such as drinking water, arable land and basic foodstuffs, must be uncoupled from securities trading and the stock market. If these tasks are to be performed efficiently, the proposed supranational financial surveillance authority, with the legitimation of the reformed United Nations, must be endowed with the necessary authority and equipped with the corresponding means. A globally valid financial transaction tax (a percentage levy on every international financial transaction in the region of 0.5-1.0%) would be written into international law and the resulting revenues would be used for measures to promote development in structurally weak and socio-economically disadvantaged regions throughout the world. In the course of this reform process the main pillars of a new regulatory financial framework would gradually be implemented accordingly…
A society oriented economy aims to overcome the levy, appropriation and enrichment functions of the financial system and the self-referential function of money and return the money back to its productive and life-serving functions. Important elements of a respective financial regulatory framework would be:
– No investment and stock exchange transactions are allowed anymore. With a ban on any money speculation and on all trade with debt instruments, the stock exchange would be „only“ a place for trading actual company shares, the foreign exchange market a place where actual exchange rates are formed, and the commodity exchange markets a place where respective market prices for raw materials and food items shaped.
– The interest-based system of investment financing is fundamentally to be changed by the criterion of time-unbound extinction. This excludes the simultaneous charging of interests, as they are of advantage for the lenders compared to repayment. To achieve this, the standard interest rate may be replaced by a one-time loan fee to be paid by the borrower (or a third party) as remuneration to the credit selling agent – i.e. usually to the bank. This eliminates the exponential growth of payable interest.
– Banks that issue central bank money for granting credit, namely „debt money“, should be organized into public institutions of the community (common good) or as their trustees. They should therefore be brought back to their non-profit service function within the responsibility of the public sector: deposit function; Broker function between savings deposits and loans without income levy for the bank, and; public interest allocation function. The business expenses are covered by the loan fees. Employees of public sector banks are employees with fixed tariff salaries without bonuses as in other administrations. Public banks exist at regional/local and at the country level. In addition, there may be co-operative banks and private banks in trust for the public interest. The right for money creation is solely with the central bank. The hitherto practiced money creation by the commercial banks is no longer possible.