Banking

Let’s get Scotland’s banking right

Stephen Richard — Mon, 11 Oct 2021 07:55:03 +0000

Let’s get Scotland’s banking right

Primary Author or Creator

Common Weal

Stephen Richard Mon, 10/11/2021 - 08:55

Alternative Published Date

2021

Category

Banking

Type of Resource

Video

Length (Pages, words, minutes etc...)

2minutes

Fast Facts

Policies to get banking oriented to customer benefit rather than profit. Pointers on how to establish and run a Scottish Central Bank.

Resource Address (URL)

https://commonweal.scot/big-ideas/lets-get-scotlands-banking-right/

Keywords

banking

Central banking

Scottish Central Bank

Language English

SETTING UP A SCOTTISH BANKING SYSTEM

Stephen Richard — Fri, 01 Oct 2021 11:44:52 +0000

SETTING UP A SCOTTISH BANKING SYSTEM

Primary Author or Creator

Peter Ryan

Stephen Richard Fri, 10/01/2021 - 12:44

Additional Author(s) / Creators

Scottish Independence Convention

Alternative Published Date

2020

Category

Banking

Type of Resource

Policy Paper

Length (Pages, words, minutes etc...)

10pp

Fast Facts

A Scottish central bank will need to be set up to oversee the creation of a new Scottish currency. It will be the competent authority providing regulatory oversight of the banking system.

More details

Several concurrent activities would then follow to deliver the new banking system:

Issuing Scottish banking licences and creating a commercial banking system;
Setting up a Scottish Payments System.
Creating a Scottish Universal Bank Account for all people in Scotland to provide the resilience that is missing in the UK banking system

Scottish Independence Convention (SIC) Transition Paper No.4 Banking

Resource Address (URL)

https://independenceconvention.scot/wp-content/uploads/2021/04/SIC-Transition-P…

Keywords

Language English

SCOTTISH RESERVE BANK

Stephen Richard — Thu, 16 Sep 2021 11:59:38 +0000

SCOTTISH RESERVE BANK

Primary Author or Creator

Tim Rideout

Stephen Richard Thu, 09/16/2021 - 12:59

Category

Banking

Currency

Type of Resource

Blog

Fast Facts

The Scottish Reserve Bank website attempts to clear up many of the deliberate myths surrounding the establishment of a new Scottish currency

Resource Address (URL)

https://www.reservebank.scot/blog#gsc.tab=0

Keywords

Scottish economy

Currency

Scottish Reserve Bank

Scottish National Bank

Language English

Let’s get Scotland’s banking right

Stephen Richard — Tue, 14 Sep 2021 08:33:51 +0000

Let’s get Scotland’s banking right

Primary Author or Creator

Common Weal

Stephen Richard Tue, 09/14/2021 - 09:33

Alternative Published Date

2020

Category

Banking

Type of Resource

Video

Fast Facts

Banking has lost its way, forgetting that it should be serving its customers and not exploiting them. But a mutually-owned People’s Bank can change this.

Video: 2:09 minutes

More details

Banking has lost its way, forgetting that it should be serving its customers and not exploiting them. But it’s not just the way banks operate, it’s whether people can even get access to proper banking with more and more branches closing. Common Weal believes both can be fixed with a mutually-owned People’s Bank. How this would be done is explained in the report Better Banking which proposes using an existing ‘bank in a box’ model. This is a preprepared model for a banking network which would initially be set up by government but would then be passed into the ownership of its customers. It has a full business plan and it would be able to open branches (or mini-branches via a ‘banking pod’ model) in any community where enough people joined the bank. It is particularly designed not to make profit from customers and to emphasise long-term, trusting relationships. These are particularly important to small businesses.

The other big banking policy Common Weal published was for a Scottish National Investment Bank – and this has already happened. It was conceived of as a way of driving investment into big Scottish businesses and other projects with a public-good focus. It would emphasise mission-orientated investment to achieve social and environmental goals as well as economic ones and would specialise in providing the kind of long-term, patient investment based on trust that the commercial banking sector has not provided. We published two reports, the first making the case for the bank and the second setting out the technical detail of how that would work.

We’ve done a number of other pieces of work on banks and banking. There is more information on our work on a central bank for an independent Scotland in the Big Idea ‘Getting Scottish Independence Right’. But we also published a proposal for how Scotland could set up its own digital currency under independence. We also produced an important report on how Scotland could set up a publicly owned payment service (like the way you pay for things at tills using cards or your phone) which would both be reliable and safe (and not harvest your data) and would also create income to help fund public services.

Video is 2:09 minutes

Resource Address (URL)

https://commonweal.scot/big-ideas/lets-get-scotlands-banking-right/

Keywords

Bank services

Scottish National Investment Bank

Currency

Language English

Scottish National Investment Bank: Submission to Consultation

Stephen Richard — Mon, 06 Sep 2021 16:42:52 +0000

Scottish National Investment Bank: Submission to Consultation

Primary Author or Creator

Common Weal

Stephen Richard Mon, 09/06/2021 - 17:42

Date Published

Sun, 12/02/2018 - 12:00

Category

Banking

Investment banks

Type of Resource

consultation response

Fast Facts

Common Weal’s submission to the public consultation of the implementation plan for the Scottish National Investment Bank.

More details

― The Scottish National Investment Bank must be a bank, not a grant body or venture capital fund. To enable the bank to be capitalised and maintain confidence from all parties, each lending decision must be made on the basis of a sound assessment of the business case. It must work on the assumption of generating stable and reliable returns on investment.

― The bank should have no restriction on who it lends to subject to meeting the mission of the bank. However its role should not simply be to fill gaps left by private banks. It should lend differently, not just lend to different people.

― It should initially be capitalised by the Scottish Government – we suggest to the order of £225 million per year for at least six years – but should also be allowed to use its capitalisation as leverage against further subscriptions from sources like pension funds.

― Three main bodies should be involved in the running of the bank. A Governance board directing operations. The Scottish Government directing the bank’s missions. And a public stakeholder board to ensure that the public good is upheld in decisions.

― Common Weal believes that all three boards should operate on a tripartite manner to ensure the bank’s missions are met.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2017/11/Scottish-National-Investment…

Keywords

Scottish National Investment Bank

Language English

Submission on the Scottish National Investment Bank

Stephen Richard — Sat, 04 Sep 2021 16:17:23 +0000

Submission on the Scottish National Investment Bank

Primary Author or Creator

Common Weal

Stephen Richard Sat, 09/04/2021 - 17:17

Date Published

Fri, 05/10/2019 - 12:00

Category

Banking

Investment banks

National bank

Type of Resource

consultation response

Fast Facts

A Consultation Submission to the Scottish Parliament’s Economy, Energy and Fair Work Committee asked for expert submissions on the ongoing work to establish a Scottish National Investment Bank.

More details

― Common Weal sees the Scottish National Investment Bank as a long-term structural intervention into the Scottish economy. Its aim is to drive investment into the Scottish economy in ways which prioritise the public good and in particular in ways that support the long-term development of Scottish enterprises and ‘anchors’ them in the Scottish economy. It should also support the development of world-class public infrastructure, housing and energy infrastructure for Scotland. In time Common Weal believes the Bank should also support and coordinate a Scotland-wide system of local banking on a mutual or publicly-owned basis. This would both address the problem of declining access to banking services in many parts of Scotland and act as the primary financial support structure for small businesses (most small enterprises do not borrow money but rather rely on long-term relationships with local banking services).

― We envisage the Bank as a source of finance which is tailored to public-good outcomes, but the bank must operate on full cost recovery basis as a commercial bank would (but without extracting private profit). It must be mission-driven not only to ensure the public good aspect but also to comply with European Union competition laws. But it should not be the job of the Bank to seek to achieve public-good outcomes alone. Rather it should work with a range of ‘intermediate institutions’ which would stimulate demand and make strategic interventions, providing finance packages tailored to need in discussion with customers and stakeholders. Common Weal has already outlined proposals for a Scottish National Infrastructure Company (an adapted form of the Scottish Futures Trust which would let the Bank lead on funding packages and instead focus on best practice in infrastructure design and project management), a Scottish National Energy Company and Energy Development Agency (based on the Danish model and driving investment into a coordinated energy system on a strategically-planned basis) and a revised enterprise support network orientated around the bank. We will publish further work on other intermediate institutions such as a National Housing Company and a body to oversee a Scottish Green New Deal.

― In this model the bank would accept any applications for lending or equity investment. These might come directly from enterprises or projects or by negotiating appropriate lending packages with intermediate institutions which would market those to relevant customers. Any applications the Bank receives would then be assessed against a series of current ‘missions’ which would help to give a weighting to different applications based on an assessment of how well they align with the missions (and, in the initial stages at least, the available capital). For example, if two very similar applications were submitted, the Bank would prioritise the one which had a better profile on, for example, gender equality or efficient energy use – but it does not mean that both projects couldn’t be funded so long as both were judged not to be acting against the Bank’s missions. It is for the Bank to provide finance to applications which meet its criteria; it is for the intermediate institutions to stimulate demand and take a strategic approach to specific aspects of the economy.

― A fully-operating Bank would be able to raise capital from sources other than government (for example by attracting pension fund investment) and would be able to leverage that capital when lending or investing (we believe that a three-to-one capital liquidity ratio is sensible and cautious, enabling the bank to lend £3 for every £1 it holds in capitalisation). To be able to attract this kind of investment the Bank should aim to develop a balanced ‘loan book’. Lending to medium-sized enterprises can be comparatively high-risk. This can easily be off-set if the Bank ensures significant exposure to low-risk lending. There is very substantial scope for this in Scotland because of under-investment in public rental housing and energy infrastructure and also because of the need to replace current funding models for public infrastructure. If the Bank has a portfolio exposure which is 70 per cent housing, energy and public infrastructure (all of which is very low-risk) it will position it well to be able to take a greater risk in the 30 per cent of its lending which is to businesses, social enterprises and so on. This will make the Bank a very attractive investment opportunity for investors looking for reliable long-term returns (such as pension funds). There is every reason to believe that the Bank could be capable of meeting as much demand as emerges through this form of capitalisation and leverage – we believe total investments made could quickly reach the scale of tens of billions of pounds, contingent on demand.

― To ensure that a long-term approach is taken in the running of the Bank we have proposed that there should be a balanced governance structure. The Bank must be a corporate entity which has an independent Board which is wholly responsible for the Bank’s operation. It will be wholly owned by government and government may set broad strategic goals but government will not be able to instruct the Bank directly on its business practices. Governments can at times take a short-term approach as a result of electoral cycles and if left to financial administrators alone it would be easy for the public-good mission of the bank to get lost over time. To address both of these issues we proposed that the professionals who run the bank should receive advice from a second source to act as a balance to the role of government. We therefore proposed an advisory body which would be a tripartite stakeholder body representing customers (private and social enterprises), stakeholders (such as local authorities or housing associations) and representatives of public-good concerns (such as trade unions, environmental organisations and equalities groups). The Advisory Group would provide its advice directly to the Board of the Bank.

― To reach this vision will take some time. The major barrier is that there will need to be negotiations with both the UK Treasury and Bank of England (and potentially the European Union) to gain dispensations to make all this possible. Effectively the Scottish National Investment Bank needs to be treated in exactly the same way as RBS (which is majority publicly owned but the liabilities of which are not counted against public sector debt and it is exempt from ‘co-investment’ restrictions). Common Weal has confidence in the team which is setting the Bank up. Their view is that we will be in a stronger position to engage in these negotiations if the Bank is first able to demonstrate demand. We agree with this position and so are content with the broad thrust of the legislation and the approach being taken since it enables the first phase and does not restrict a second phase. However, we would like to see an ambitious development programme set for the Bank which would see it seeking to begin the above negotiations within two or three years of operation, enabling the Bank to approach the vision set out above within perhaps five or six years.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2019/05/EC-SNIB-submission.pdf

Keywords

Scottish National Investment Bank

Equity investment

Language English

Investment in Scotland: A Common Weal Approach

Stephen Richard — Tue, 31 Aug 2021 14:24:48 +0000

Investment in Scotland: A Common Weal Approach

Primary Author or Creator

Iain Cairns

Stephen Richard Tue, 08/31/2021 - 15:24

Additional Author(s) / Creators

Christine Cooper, Gordon Morgan, Common Weal

Alternative Published Date

Septtember 2014

Category

Banking

Type of Resource

Policy Paper

Fast Facts

― Taking a look at UK debt over the long-term shows that it is historically at a very low level. It is also incorrect to claim that we cannot afford the interest on debt.

― The reality is that there has rarely been a more favourable time for the UK Government to borrow in order to invest in renewing its infrastructure and fostering new industries.

― It is testament to the outright failure of the Thatcherite project – the deregulation and privatisation of much of the UK economy and the increasing emphasis placed on the financial sector – that the UK’s growth has declined every decade since the former Prime Minister began the process in the 1980s.

― The case of Private Finance Initiatives (PFI), which has dominated infrastructure investment since the 1990s, exemplifies how private finance provides poor value for money.

― The financial system in the UK, which by its nature, distributes wealth from the productive economy to the financial sector from the indebted poor to the wealthy shareholders of banks and from regions to financial centres, is not capable of delivering the kinds of economic and social outcomes people have a right to demand.

― Investment is what the UK lacks, not money.

More details

The financial system in the UK, as this report has shown, which by its nature distributes wealth from the productive economy to the financial sector, from the indebted poor to the wealthy shareholders of banks and from regions to financial centres, is not capable of delivering the kinds of economic and social outcomes people have a right to demand. Moreover, it threatens to create a kind of‘perpetual state of crisis’which acts as a justification for the utterly destructive rounds of austerity to which all mainstream parties at Westminster have committed.

This report shows another way forward.

Governments and central banks must once again regard monetary policy as being about more than merely the quantity of money in an economy, which is supposedly controlled by the price of money (i.e. interest rates). Governments and central banks must also be concerned with the ‘quality’ of money in the economy, i.e. for what purposes the money is allocated, how it is allocated and what kind of institutions allocate it.

Central bank credit controls or guidance is a tried and tested method of improving productive investment while reducing speculation.

Also at the national level, a National Investment Bank should be the central component of a new and accountable financial architecture. But the financial sector must also be remodelled around democratically accountable, locally responsive banks and credit co-operatives, run by communities for communities.

Investment is what the UK lacks, not money.

Not only will this create stability in the financial sector. It will be a huge boost to the productive economy, including for co-ops and social enterprises which seek to put people before profit. It is self-evident that if we are to have an economy which is run in the interests of communities rather than shareholders, communities must be in control of directing the flow of financial resources towards their chosen outcomes.

Our current economy - characterised by low-skilled work, disempowered employees and enterprises concerned almost exclusively with profit - is to a large extent a reflection of the priorities of a financial sector which itself is dominated by the desire for profit above all else.

A Common Weal society needs a Common Weal financial sector. And considering the current debate about Scotland’s constitutional status, it is worthwhile emphasising that viewing monetary policy in these broader terms would allow Scotland, even without its own currency, to pursue its own independent monetary policy through the strategies outlined in this paper, which promote diversity in the financial sector.

Finally the austerity narrative must be challenged. The current rounds of austerity in the UK are justified neither by the level of debt nor the rate of interest paid on that debt, both of which are currently low by historical standards.

Investment is what the UK lacks, not money.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2020/09/Investment-in-Scotland-A-Com…

Keywords

UK debt

UK Government Borrowing

Privatisation

Private Finance Initiative

Wealth

public investment

Profit

Language English

Blueprint for a Scottish National Investment Bank

Stephen Richard — Tue, 31 Aug 2021 07:25:37 +0000

Blueprint for a Scottish National Investment Bank

Primary Author or Creator

Laurie MacFarlane

Stephen Richard Tue, 08/31/2021 - 08:25

Additional Author(s) / Creators

Common Weal, New Ecconomics Foundation

Alternative Published Date

2016

Category

Banking

Type of Resource

Policy Paper

Fast Facts

― The SNIB’s overarching mandate should reflect a broader economic strategy developed in a democratic process, controlled by the Scottish Government, and reviewed periodically.

― The core activities of a SNIB should be to support investment in infrastructure and SMEs and to direct investment towards innovation for social and environmental objectives.

― The SNIB should be publicly owned but operated independent as a fully commercial entity, free of day-to-day political interference.

― Robust ownership and governance structures should be put in place which promote the highest levels of transparency and accountability.

― The Scottish Government should inject £225 million of capital, increased to at least £1.35 billion over six years.

― The SNIB should be allowed to raise funds on capital markets by issuing bonds up to a leverage of 2.5 times its subscribed capital.

― The Scottish Government should request that the UK Government grant SNIB dispensation from Treasury rules which would otherwise mean that SNIB lending counts against Scottish Government borrowing limits.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2016/10/Blueprint-for-a-Scottish-Nat…

Keywords

Scottish National Investment Bank

Language English

Banking for the Common Good: Laying the foundations of safe, sustainable, stakeholder banking in Scotland

Stephen Richard — Tue, 31 Aug 2021 07:05:54 +0000

Banking for the Common Good: Laying the foundations of safe, sustainable, stakeholder banking in Scotland

Primary Author or Creator

Gemma Bone

Stephen Richard Tue, 08/31/2021 - 08:05

Additional Author(s) / Creators

Common Weal, Ric Lander Christine Berry, Josh Ryan-Collins, Ben Wray, Fionn Travers-Smith,

Date Published

Thu, 03/10/2016 - 12:00

Category

Banking

Fast Facts

The report makes the case for:

Not-for-profit “People’s Banks” should be established in Scotland’s regions to offer banking services to local people and business.

Local banks would be part of a “People’s Banking Network” to share risk and cooperate on training, marketing and the operation of key services such as payments systems.

This paper is a collaboration between Common Weal, Friends of the Earth Scotland, Move your Money and New Economics Foundation. Author: Gemma Bone.

More details

. UK-wide 2 million people do not have a bank account and there are now 1,500 communities with no access to banking. Evidence suggests that the poorest are the most likely to lack access. Small businesses are neglected, and what lending is available is disproportionately focused outside of Scotland. Our banks are not providing sufficient funds for much-needed infrastructure. Our banking system is structurally unable to fund “patient capital”, i.e. low-return but potentially risky investments, like those which are needed to stimulate the transition to a low-carbon, sustainable economy. Instead, billions are channelled into property, inflating asset prices, as well as unsustainable industries such as coal mining, the manufacture of nuclear weapons, and speculation on food prices, a practice which is fuelling global malnutrition.

We need more diversity in our financial institutions. Other developed economies have a range of institutions which provide stability and public accountability. National investment banks provide strategic and long-term finance to industry either directly or through intermediaries. Examples include Germany’s Kreditanstalt für Wiederaufbau, the European Investment Bank and the Nordic Investment Bank.The existence of national investment banks or other forms of public ownership of banking is closely associated with higher economic growth and greater economic stability

Not-for-profit “People’s Banks” should be established in Scotland’s regions to offer banking services to local people and business. They would be overseen by representatives of local people and bank workers with support from financial experts, and be capitalised by national investment bodies and local authorities. By investing solely in their respective regions, People’s Banks would help money circulate within local areas and serve the public interest. Local banks would be part of a “People’s Banking Network” to share risk and cooperate on training, marketing and the operation of key services such as payments systems.

A “Scottish National Investment Bank” would help establish these institutions by offering seed funding and structural support. The bank would be institutionally independent from Government but publicly owned, and mandated to promote through its lending sustainable development and employment. A national investment bank would leverage Scotland’s existing infrastructure budget to invest in projects which private banks are unwilling or unable to fund. We argue that with only a modest 6.5% (£225 million) of the Scottish Government’s capital budget invested as subscribed capital this new bank would leverage a total of £3.4 billion to invest from year one. Scotland’s local government pension funds, valued at £28 billion, could invest in bonds issued by such a bank, giving them a reliable mechanism through which to invest in local infrastructure.

Scotland is part of the Sterling area and just as this analysis is applicable across the UK, so are our proposals. However in the absence of a response from the UK Government we believe that with vision and political will the Scottish Government can implement these reforms directly.

Our recommendations are:

1. Scotland’s political parties should discuss and endorse the implementation of our model for banking for the common good.

2. The Scottish Government should convene a task force to examine these proposals in greater depth, bringing in a wide range of stakeholders to include Scottish Enterprise, economic development agencies, existing local and municipal banking institutions, credit unions, civil society groups and local authorities.

3. The taskforce should commission legal and regulatory advice on how a Scottish National Investment Bank could be created, to underpin the creation of a People’s Banking Network for local, democratic banking in Scotland.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2016/03/Banking-for-the-Common-Good-…

Keywords

banking

Scottish National Investment Bank

Local Banking

Language English

Resilient Scotland Part One

Stephen Richard — Sun, 15 Aug 2021 16:00:56 +0000

Resilient Scotland Part One

Primary Author or Creator

Common Weal

Stephen Richard Sun, 08/15/2021 - 17:00

Alternative Published Date

2021

Category

Economy

Banking

Type of Resource

Policy Paper

Fast Facts

The borrowing cap for the Scottish Parliament should be removed or lifted substantially so public expenditure can be used where needed; but, more importantly the Scottish National Investment Bank should be given full dispensation to act as a bank and thus capitalise from sources such as pension funds and lend to the public as well as private sector. Public procurement should be entirely reprofiled with the public policy goal of supporting Scottish business and achieving the maximum number of manufacturing jobs.

More details

By using Resilience Economics we can replace an economic toolbox with few policy options which creates inequality, environmental harm and repeated economic crises with one based on a much more balanced set of economic theories which prioritise public-good outcomes and will result in a more stable economy. This can be made to work under devolution if we focus on unlocking Scotland’s economic underdevelopment and support this not with bailouts for existing businesses but transition packages linked to reprofiled public spending and sustainable investment from the Scottish National Investment Bank.

This is underpinned by a series of over-arching policy goals which explain what kind of economy we are seeking to achieve; replacing an unhealthy focus on GDP growth with these will make clear the kind of economic change Scotland is pursuing. Scotland is inordinately well positioned to achieve this because of the current underdevelopment of our copious natural and human resources.

To achieve this we must do the following: Set up a Transition Academy to help policy-makers adapt to the new agenda. Set up a Diversification Agency to support new and existing businesses to grasp the opportunities being unlocked. Create a guaranteed retraining programme for those who lose employment. Reprofile public procurement spending to support this transition Begin a major programme of public rental house-building linked to an integrated supply chain strategy. Create a mortgage-to-rent scheme for households at risk of losing their home. Introduce a tourism rescue package with all citizens being given a £100 voucher for a stay at a Scottish hotel Introduce a similar voucher scheme for the hospitality sector. Develop a form of Universal Basic Income for artists. Devise plans for a future Festival of Scotland to support the entertainment and events sector. Create an industrial strategy to unlock new economic activity in food production, materials manufacture, light manufacturing, housing, energy, hydrogen, land, design and innovation.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2020/06/Resilient-Scotland-Part-One…

Keywords

Scottish National Investment Bank

Re-training

Housing

Rental Housing