Banks (3) - Changing the System

Modern banking practices are largely shaped by government policies. Governments have supported the common practice of moving demand deposits onto their own balance sheets, so we should not count on governments to resolve this problem. Fortunately, individuals can resolve the problem without waiting for their government.

We should start asking our banks who owns our demand deposits. They will tell us that that the money belongs to us. We should respond by asking them why it appears on their balance sheet, if it belongs to us. They will respond with “weasel words” about modern banking practice and banking laws and deposit insurance. However, if enough people persist in asking these questions, banks will start get concerned.

When there is sufficient demand for a true safekeeping service, some banks will start to provide it. A bank that has an eye for opportunity will see an opportunity to get a head start in a niche market.

The customer is king. Once a few banks start offering this service, people who want a genuine safe-keeping service will switch their business to those banks. If enough people are serious about honest banking, the other banks will get worried about losing business. Many will start offering a true safe-banking service, so that they do not lose customers. Some will set up separate institutions in attempt a significant share of this business.