Three Prinicples for Honest Banking (1)

1. All bank loans must be matched with a deposit for the same term.

If this principle is followed, then no theft will be possible. Every term loan issued by a bank will be matched by a deposit or group of deposits with the same term. All bank loans will be for a fixed term, so a loan could only be made, if the bank has already received a deposit or deposits with the same term. Banks will only lend money that has been assigned to them for lending to others.

This principle is incredibly simple, but it is the key to sound money. It means that whenever someone borrows a valid claim, there is someone else who is willing to give up an equivalent claim to goods and services at the same time (at a price). This will have the effect of raising the interest rates on longer term deposits. This is reasonable, as the longer the term of the loan, the greater is the risk of loss.