The 5th Empire - Banks

Modern banking derives most of its power from government. Banks are privileged institutions, allowed to extend credit through fractional reserve banking. They are also protected from insolvency by central banks.

None of this is possible without government. Fractional reserve banking, unless advertised to the depositors, will be treated as fraud in the 5th Empire.

There will be a separation between merchant banking that use deposits to invest in business ventures, and deposit banking that restrict themselves to safer investments. Depositors will be told up front what sort of risk they are taking. There will be no bank guarantees, but also no shady risk taking. Bankers that abuse the trust people put in them will be prosecuted. There will be no government intervention or bail outs to protect them.

Banking in the 5th Empire will be a small but respectable industry involved in investments and the facilitation of loans. There will be very little credit expansion. The economy will not be artificially stimulated. Economic growth will therefore be steady, with fewer and less severe booms and busts. Putting money in a savings account will again be seen as a sensible investment strategy.

However, as long as state run society is dominant, and banks are aggressively expanding credit, people are best advised to stay away from banks. Extra money should be saved in physical gold and silver, stocks and real estate. Cash holdings should be kept low relative to other savings.

Bank - By John Bradley - Own work, CC BY-SA 3.0, Link