‘Put payment transactions for private clients under one new state-owned bank’
From receiving our salary to doing our shopping: we are completely dependent on commercial banks for all our payment transactions. But what happens if they collapse? In his inaugural lecture, Professor Bart Joosen calls for a rigorous change: ‘Put payment transactions for private clients under one new state-owned bank, the State Post Bank 2.0.’
Why are you advocating such a drastic change?
‘If one or more banks collapse, it will cause major problems in society. People will no longer be able to access money, receive salaries or pay bills. The government will then have to rescue the bank and guarantee that clients will not lose their money. And that means rescuing a non-viable bank because of the payment transactions of private individuals.’
Can you give an example of a bank that had to be rescued?
‘Would it have been necessary to nationalise SNS Reaal in 2013 if it hadn’t had to keep around a million bank accounts in operation? The bank was at the end of its economic life and had to be nationalised, costing the state billions of euros. I’m not worried at the moment about a bank crisis. After all the measures taken after the financial crisis in 2007, the Dutch and European banking sector has become much stronger and more resilient. But times can change, of course.’
'Why should we put billions of euros into rescuing a non-viable bank?'
How realistic is your scenario of such a state bank?
‘Almost a hundred years ago, we had a state-owned bank, the Rijkspostspaarbank. In fact, all private individuals used this bank until 1980. Then it was privatised and it is now the ING. Since then, the whole banking system has been in the hands of commercial banks, and I argue that this should be reversed, at least to some extent. The energy network is a powerful example of how privatisation can be reversed. This network came under government control again in the 90s and commercial companies now take care of the supply of gas and electricity. Nationalisation is an enormous operation, but at the end of the day it has a lot of advantages.’
Will society and the banks themselves welcome such a change?
‘The present mistrust citizens feel towards the government makes such an operation difficult. I don’t think that the banks will have much difficulty with this kind of construction, and they may well even be happy with it. They currently make no profit at all from payment transactions and in this new model they can offer private clients financial services, such as mortgages and savings accounts. Another example is that this would give the government more control over the payment system, which would make whitewashing and financing terrorism more difficult. This semi-public supervisory task is now in the hands of commercial banks and I think they would be happy to relinquish it.’
Are you proposing a new state bank, or nationalisation of an existing bank?
‘That is indeed the question that I further explore in my inaugural lecture. You could think of remodeling the Volksbank, the former SNS bank. But I think it would be better to start with a clean sheet and setup a new Rijkspostbank 2.0 that only handles payment transactions.’
What are your research plans for the coming years?
‘I’ll be further studying the payment infrastructure and will recruit a PhD candidate for this. I will also carry on with my research on climate risks, like flooding and forest fires and the way banks and insurers deal with these issues. But in my inaugural lecture I will mainly look at the desirability of a Rijkpostbank 2.0. I’ve been thinking about this for some time and now I want to share it with a broader public.’
Sign up if you want to attend the inaugural lecture on 24 May or follow the livestream.
Text: Linda van Putten