Sound Banking System (2) Principle

The important principle underlining a sound banking system is that the money in a bank does not belong to the bank. A transaction bank is storing the property of someone else, in the same way as warehouse. A warehouse owner keeps an inventory of everything that is stored in his warehouse. He records the identity and contact details of the owner of each item. He can even transfer the ownership of an item to another person, if instructed to do so by the original owner. However, the recording of assets in his care is kept separate from his own asset register. He can treat the warehouse as his asset, but he must not record the furniture given into his care as his property.

Transaction banks would operate in the same way. They would keep an inventory of all the money being stored and the identity of its owners. These records must be separate from the bank’s own financial accounts. Money stored must not creep onto the bank’s asset register.

The money deposited in a transaction bank is owned by the person who deposited it, not by the bank. This is a biblical principle.

If a man gives his neighbor silver or goods for safekeeping and they are stolen from the neighbor's house, the thief, if he is caught, must pay back double. But if the thief is not found, the owner of the house must appear before the judges to determine whether he has laid his hands on the other man's property…. The one whom the judges declare guilty must pay back double to his neighbor (Ex 22:7-9).

When the goods entrusted to person another for safekeeping go missing, that person is accountable for the loss. If the thief is found, the thief must make restitution, but if not, the person caring for the property must make restitution to the owner. In God’s eyes, neglect of property given for safekeeping is the same as theft.

The Bible describes the valuables presented for safekeeping as the “property” of the depositor, even when they are in the house of the other person. This confirms the principle that the ownership of property does not transfer to person who takes it for safekeeping. The owners of property retain their ownership, until they sell the goods. This biblical principle applies to banking. When a bank treats money deposited with it for safekeeping as its own asset, it has misappropriated something that belongs to another. It has “laid its hands on the other man’s property”.