Banking sector diversity is key to financial stability

In January 2019, the Netherlands Scientific Council for Government Policy published the report Money and Debt (‘Geld en Schuld’). This report explains how money creation works, describes the main problems of the current monetary and financial system and discusses several reform options. In this article we present the report’s main analysis and conclusions. We focus in particular on our recommendation to facilitate a bank that deals exclusively with payment and savings services.

IN BRIEF
● The Dutch financial system is characterized by exceptionally high private debt levels and an imbalance between public and private interests.
● To address these problems, our financial system needs to change significantly. In particular, greater diversity in the banking sector is essential.
● A payment bank can contribute to diversity and, as such, be part of the solution.