29th August 2012
Mindful Money: How uncomfortable do you think most people would be with the concept of fractional reserve banking if it was properly explained to them? At present it seems that while the discussion is notionally about policymakers trying to protect consumers, it is really being framed as regulating for, not with them.
Tony Greenham: It is important to recognise that banks perform 3 key functions:
The provision of ‘free' payment services under (1) must always be cross-subsidised from other products which encourages over-charging to other customers or service in (1) (eg overdraft charges and terrible forex rates when you use your cards abroad) or aggressive (IE mis-) selling under (2) or (3).