Scotland’s banking system is “unsafe and unfit for purpose” and new “safe, sustainable, stakeholder” banks are needed, linked together through a government-owned network, a new report published today (10/3/16) has argued.
The report, ‘Banking for the Common Good’, comes as the danger of a new financial crisis has been heightened in recent months, with government-owned RBS – Scotland’s biggest bank – telling investors to “sell everything”, as its shares slumped to their lowest value in more than 3 years.
A collaboration between Friends of the Earth Scotland, the New Economics Foundation, the Common Weal and Move Your Money, the report shows that Scotland’s banking sector is made up of a very small number of mega-banks that are failing in terms of services to customers and companies, and of investment in a sustainable and productive economy.
The authors put forward three key proposals that the Scottish Government could enact now
a powerful Scottish National Investment Bank
locally-rooted ‘People's Banks’
a publicly-owned interbank payment system
The report, authored by Gemma Bone, argues that the new banks could make the Scottish economy more resilient in the face of a future financial crisis by increasing “counter-cyclical spending”, as well as directing funding to “environmentally and socially useful projects”. The proposals draw on best practice internationally including the German ‘Sparkassen’ model and the Nordic Investment Bank.
Gemma Bone, a researcher at Newcastle University said:
“The UK missed a big opportunity to reform the banking system after the crisis of 2008, and banking reform has since dropped off the agenda. We wrote this report to show that systemic reform of banking is both possible and desirable.
It is pleasing to launch it in Edinburgh, a city with a long and varied history of financial innovation but this year we are calling on Scotland to take up a leading role once again to transform the banking system to better meet the pressing needs of the environment, businesses and society.“
Lesley Brennan, Labour MSP for North East of Scotland who is hosting the report launch at the Scottish Parliament this evening commented,
“Since the financial crises of 2008, taxpayers and consumers have been effectively paying the price for the breakdown of an unsustainable model of banking seen here in Scotland and across the world. Simply returning to yet another unsustainable top-heavy model with ‘light touch regulation’ cannot be an option going forward.
“From credit unions to investment banks, there are many more financially, socially and environmentally sustainable examples both locally and internationally which I believe both the UK and Scottish Governments should draw on and support to avoid repeating the mistakes of the past and improve investment and financial inclusion in communities across the country. ‘Banking for the Common Good’ is a very valuable contribution to this debate and I congratulate all the contributors.”
Robin McAlpine of Common Weal said,
“People think that banking is one of those issue where Scotland just has to sit around and hope that Westminster does something good - which it never does. We really want to get across the message that Scotland could create a really powerful, people-centred banking system within the powers it already has and that this could be a really big, really transformative project for a Scottish Government. It is the kind of project future generations would thank us for.”
Friends of the Earth Scotland finance campaigner, Ric Lander commented,
"Scottish banks pour billions into the world's biggest polluters, nuclear weapons manufacturers and food price speculation. Instead we need banking that is grounded in local communities and serves society and our environment."
"We are proud to be launching this report showing how, with some political courage, the Scottish Parliament could create banking for the common good."
Fionn Travers-Smith, Campaign Manager for Move Your Money said
“Having enacted limited reform since the crisis of 2008, the UK Government has completely capitulated to the big banks’ deregulatory agenda, endangering society and increasing the risk of another financial crisis. Scottish policy makers must be courageous in establishing a real “new settlement” in banking - one that works for the benefit of the Scottish people, and for the common good of the broader economy”.
Christine Berry, Senior Researcher, New Economics Foundation concluded,
“Despite the dangerous complacency guiding a return to business as usual in the City, we are nowhere near having fixed the problems with our banking system that led to the crisis of 2008.
“We’re still far too dependent on a small number of very large, very similar shareholder-owned banks with little interest in serving small businesses or rural communities, or in financing the transition to a low-carbon economy.
“Scotland doesn’t have to wait for Westminster to wake up to this: this report shows it has the power to lead the way in building a better system, learning from the best of our European neighbours.”
1.”Banking for the Common Good” Executive Summary and full report www.foe-scotland.org.uk/banking-common-good
2. The report will be launched on Thursday 10th March at 6.15pm at the Scottish Parliament, hosted by Lesley Brennan MSP.
The event will outline how the Scottish Parliament could build a diverse and democratic banking system, composed of local and national institutions which underpins a thriving Scottish economy.
With contributions from:
Gemma Bone Finance Innovation Lab and Author: "Banking for the Common Good"
George Kerevan MP, House of Commons Treasury Select Committee
Lesley Brennan MSP, Scottish Parliament Finance Committee
Ben Wray, Common Weal
Christine Berry, New Economics Foundation
If journalists wish to attend they should email Ric Lander rlander [at] foe-scotland.org.uk
3. Friends of the Earth Scotland is:
* Scotland's leading environmental campaigning organisation
* An independent Scottish charity with a network of thousands of supporters and active local groups across Scotland
* Part of the largest grassroots environmental network in the world, uniting over 2 million supporters, 75 national member groups, and some 5,000 local activist groups.
Common Weal is a Scottish think-and-do tank that proposes ideas and policies that put all of us first, for further information go to allofusfirst.org
New Economics Foundation is the UK's leading think tank promoting social, economic and environmental justice. Our aim is to transform the economy so that it works for people and the planet. neweconomics.org
Move Your Money UK is a national campaign for a banking system that helps to build and support a just and sustainable society. We are an independent not-for-profit organisation working to improve the banking system through collective individual action, and promoting ethical and sustainable financial institutions in the UK. moveyourmoney.org.uk