Re: Do We Need Commercial Banks?

["Prof BJ Moore, Ekonomie, tel 2416" <BJM@xxxxxxxxxxxxxx>]

William
This is a problem that has often worried me. If banks were to loose
their market share to nonbanks, who could not create money, how would
agregate demand grow?
Basil Moore





Date:          Thu, 26 Nov 1998 18:26:04 GMT
Reply-to:      pkt@xxxxxxxxxxxxxxxx
From:          wfhummel@xxxxxxxxxxxx (William F. Hummel)
To:            POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
Subject:       Do We Need Commercial Banks?

Banks have long since lost their near monopoly in financial
intermediation.  Non-bank financial institutions have become the
dominant source of financial capital supporting economic growth.
This raises the question:  Can the central bank, working with
non-bank intermediaries, perform all of the necessary functions,
or is there some fundamental reason that it must license private
financial institutions to create deposits (credit money) which it
guarantees to be interchangeable with definitive money?

William F. Hummel