The Bank - An Institution Coming to an End? The Absurdity of Bail-Out Programs: A Vision for a Fundamental Reform of the Financial Sector (Die Institution „Bank“ ist am Ende – das Absurdum Bankenrettung. Plädoyer für eine grundlegende Neuordnung des Finanzsystems)

7 Pages Posted: 8 Jul 2009 Last revised: 13 Jul 2009

See all articles by Rainer Lenz

Rainer Lenz

University of Applied Sciences, Bielefeld

Date Written: July 7, 2009

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 type of organization of market-based financial business processes? Tracing the development line of the banking sector of past decades a general trend towards disintermediation and decentralization is noticeable. However the final 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 develop an outline for a fundamental reorganisation of the financial sector.

Keywords: Financial crisis, Banking sector, Financial sector reforms, virtual market place

JEL Classification: A10, D20, D21, D23, E44, F36, G00, G10, G15, G20

Suggested Citation

Lenz, Rainer, The Bank - An Institution Coming to an End? The Absurdity of Bail-Out Programs: A Vision for a Fundamental Reform of the Financial Sector (Die Institution „Bank“ ist am Ende – das Absurdum Bankenrettung. Plädoyer für eine grundlegende Neuordnung des Finanzsystems) (July 7, 2009). Available at SSRN: https://ssrn.com/abstract=1431170 or http://dx.doi.org/10.2139/ssrn.1431170

Rainer Lenz (Contact Author)

University of Applied Sciences, Bielefeld ( email )

Interaktion 1
Bielefeld, 33619
Germany

HOME PAGE: http://www.fh-bielefeld.de/fb5/lenz

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