Shadow Banking .. Narrow Banking, Infrastructure Bank ..etc ...

August 2011

IMF Working Paper ~ Institutional Cash Pools and the Triffin Dilemma of the U.S. Banking System

http://www.imf.org/external/pubs/ft/wp/2011/wp11190.pdf

Articles of interest ..
"Narrow banking is a proposed type of bank called a narrow bank also called a safe bank. Ultimately, if adopted widely, this could lead to an entirely new banking system"

September 15, 2009
Centre for the Study of Financial Innovation (CSFI)

The Reform of Banking Regulation

We should spend less time trying to ensure that our regulators can regulate financial behemoths with turnovers bigger than the GDP of many countries and more on trying to redesign the financial services industry so that regulation focuses on the interests of the public as consumers of financial services.
Narrow Banking (full report) http://www.johnkay.com/wp-content/uploads/2009/12/JK-Narrow-Banking.pdf
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Narrow banking is a proposed type of bank called a narrow bank also called a safe bank. Ultimately, if adopted widely, this could lead to an entirely new banking system.

Narrow banks can, by risk reduction measures designed into the narrow bank, significantly reduce potential bank runs and the need for a deposit insurance provided by the central bank. It is sometimes suggested as an improvement upon fractional reserve banking.

Narrow banking would restrict banks to holding liquid and safe government bonds. Loans would instead be made by other financial intermediaries. That is, the deposit taking and payment activities have been separated from financial intermediation activities. Two different types of banks (financial companies) are needed, one for each activity.

Snip ~ September 2010 ~ The G-M paper provides a concrete, though in some respects not fully elaborated, proposal to remedy the information problem in the repo market through creation of statutory franchise value for what G-M calls Narrow Funding Banks (NFBs). These banks would be "narrow" in that their only assets would be asset-backed securities (ABS) and very high quality instruments such as Treasuries.

They would, it appears, make their money from the income streams associated with the ABS. They would raise the funds to purchase ABS through debt issuance and, most significantly for the proposal, the repo market, in which the collateral offered would be liabilities of the NFBs.

The government would regulate the NFBs directly, as it does all banks, but also by setting requirements for the ABS that could be bought by the NFBs. This regulation is intended to provide market confidence in the liabilities of the NFBs, which would be further buttressed by NFB access to the discount window.

http://www.federalreserve.gov/newsevents/speech/tarullo20100917a.htm

Today, August 2, 2011 ~ Obama Mentions Infrastructure Again ~ Remember ~ 2009 Obama Infrastructure Bank Takes Shape ...

*** Obama calling for more infrastructure spending and a new bank: and remember ~ American Recovery and Reinvestment Act of 2009 ...

Snip ~ ***Washington- After President Obama signed into law the "State Rail Service and Infrastructure Improvement Act", Secretary Timothy Geithner, charged with overseeing operations of the bank, has worked quickly to appoint the members of the Board of Directors of the bank. American Recovery and Reinvestment Act ...