The ‘Bank’ - An Institution Coming to an End? - Outline for a Fundamental Reorganization of the Financial Sector

Abstract

The current focus of financial policy measures in nearly all G20 countries is to rescue commercial banks by running high bail-out programs. If banks can be bailed-out, or rescued from their present plight, everything will be getting better - that is, by large, the self-proclaimed belief, or faith, of politicians who struggle to overcome the international financial crisis. But why? Why do the Western industrial countries invest countless billions of taxpayers' money and spend it on the restoration of an institution which de facto has failed to be an effective form of organization in the market? Tracing the development lines of the banking sector in past decades a general trend towards disintermediation and decentralization is noticeable. However the last evolutionary step in this overall trend is missing: the establishment of a virtual market place for capital transactions without commercial banks acting as intermediary. The goal of this article is to provide an outline for a fundamental reorganization of the financial sector.