Ring Fencing Retail Banks

Abstract

In the backdrop of global financial crisis uncovering certain fundamental infirmities in the global financial system, the high priority task of renovating bank balance sheets while reinstating the regular flow of credit to the economy, the challenge is to make the banking systems more stable and the banking services more and more competitive and available to the common public uninterruptedly. This article suggests ring fencing of retail banks, which would shield the retail banking operations from the risks arising anywhere else across the bank or the wider system.

Keywords: Retail Banks, Investment Banking, Government Policy, and Regulation, Central Banks and Their Policies

JEL Classification: G21, G24, G28, E58