We need banks that focus on the real economy, individuals and small business, not speculation and remote investments.
But the truth is that banks are already not lending. They haven’t been for years. It’s time we looked at new ways to unlock finance for households and small businesses, which is why this week, the New Economics Foundation (Nef) and a host of other organisations from the Federation of Small Businesses to Metrobank will be contributing to a conference to discuss how to create a local banking system in the UK.
Local banking works. The experience of other countries that have thriving local banking sectors, including the US, Germany and Switzerland, has demonstrated that smaller, locally focused institutions are the ones that provide economic resilience. They overcome the disadvantages faced by smaller banks by acting as a group, providing mutual insurance and pooling certain financial services, such as leasing and factoring.