Bank operations and exposure needs addressing NOW!

Why would a government chartered by constitution to protect the people be so reluctant for a Royal Commission into Australian banking when overwhelming public evidence suggest a pungent smell of endemic criminal corruption is abundant reflects vested political interest from the parliament of Australia.

The current federal budget 2017 discussions you may find the attached paper of interest.

We thank Betty Luks of Australian League of Rights presenting this paper to sosnews for our readers to review quoting – International Review of Financial Analysis published by Elsevier Inc of this paper were invited to present a submission to the Iceland government in the aftermath of the Banking collapses.

The big four taxpayer protected institutions have developed their unchallenged rule book void of all serious accountability shrouded with government protection that now rides on shaky ground.

Support escalating the upper house to investigation banks with extremely wide terms of reference reporting back to the parliament. Not applicable to a Royal Commission implemented by the House of Representatives government who appointed allied commissioners, terms of reference, then reviewed behind closed doors of the government executive alleviation any input from the peoples parliament.

Editor 

 

International Review of Financial Analysis Introduction

Thanks to the recent banking crises interest has grown in banks and how they operate.

In the past, the empirical and institutional market micro-structure of the operation of banks had not been a primary focus for investigations by researchers, which is why they are not well covered in the literature.

One neglected detail is the banks’ function as the creators and allocators of about 97% of the money supply (Werner, 1997, 2005), which has recently attracted attention (Bank of England, 2014a,b; Werner, 2014b,c).

It is the purpose of this paper International Review of Financial Analysis published by Elsevier Inc to investigate precisely how banks create money, and why or whether companies cannot do the same.

Since the implementation of banking operations takes place within a corporate accounting framework, this paper is based upon a comparative accounting analysis perspective.  By breaking the accounting treatment of lending into two steps, the difference in the accounting operation by bank and non-bank corporations can be isolated.

As a result, it can be established precisely why banks are different and what it is that makes them different: They are exempted from the Client Money Rules and thus, unlike other firms, do not have to segregate client money.  This enables banks to classify their accounts payable liabilities arising from bank loan contracts as a different type of liability called ‘customer deposits’.

The finding is important for many reasons, including for modelling the banking sector accurately in economic models, bank regulation and also for monetary reform proposals that aim at taking away the privilege of money creation from banks.

The paper thus adds to the growing literature on the institutional details and market micro-structure of our financial and monetary system, and in particular offers a new contribution to the literature on ‘what makes banks different’, from an accounting and regulatory perspective, solving the puzzle of why banks combine lending and deposit-taking operations under one roof.

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