The breaking up of the banks into smaller entities is one way of limiting the number of clients affected by a bank closure as a result of bad bank management. Also smaller size banks would allow the government to guarantee all deposits of any failed bank. This a case of small being better than big. It is also time for Britain to have a national bank which belongs to the nation and guarantees all deposits. Private and government banking should run side by side. I’ve got a far better idea on how to deal with it which would be far more market-orientated. You see although the monopolization of the banking sector, or indeed any sector, is bad. The mighty hand of government diktat is far worse, and we could see massive industries at the mercy of a populist political leader where it would be such that investors would shy way from Britain and move their operations offshore. So what to do? Well consider what a monopoly is. Once you get more than a certain share of the market you make money in an anti-market way, as in effectively by force. The amount you make on top of the market value for the work you have done depends on the market percentage share, but it is also dependent on the type of industry, like say in the energy market, if you control the distribution of the product then that gives you a license to print money.
So what we need to do is this. We should establish what this extra profit amounts to. It could be approximated using a mathematical equation to model market data. So what you do is you apply a tax, and that tax levels it up, but you could decide how much you deal with it in an easy way, just by setting the tax rates. The tax money would not go to the government as government spending is like chucking it in the bin. Instead you use it as a way to provide tax relief to small business. In actual fact what you would really need is something where there is a significant, but not massive incentive to break up yourself. There would be a shareholder interest in it, but how you do it is not up to the government or even that you would have to, so you could just carry on but pay the tax. This means the system allows for economy of scale to benefit the consumer as well. What I’m saying is use tax to iron out monopoly distortion of the market, so the best man wins.
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Earlier this month the ECB kept interest rates steady, at a historic low of 0.25%, but Mr Draghi said its members were unanimous in their willingness to begin QE if inflation stayed well below their 2% target.
Many believe Mr Draghi is more likely to cut interest rates
Their fear is that falling inflation could harm the eurozone's fragile economic recovery by reducing consumer spending - because people would be likely to put off purchases, believing prices will continue to fall.
Low inflation also means governments and businesses find it more difficult to repay their debts.
However, most analysts believe Mr Draghi's more likely choice would be a further cut in the ECB's benchmark interest rate, currently at a record low of 0.25%.
Strong euro
The bank's policymakers recently raised the idea of cutting the rate to below zero, effectively charging banks that hold excess cash at the ECB.
Such measures could be needed, Mr Draghi said, because of a euro that has strengthened by nearly 5.5% against the dollar, and by nearly 10% against the Japanese yen in the last year.
The euro is currently worth $1.39.
The currency's strength, Mr Draghi said on Saturday, accounted for a half percentage point of the decline in the annual inflation rate.
"I have always said that the exchange rate is not a policy target, but it is important for price stability and growth," he added.
"What has happened over the last few months is that it has become more and more important for price stability."
The European Central Bank (ECB) has said it will provide "further stimulus" to the eurozone economy if inflation in the bloc continues to remain low.
Mario Draghi, the bank's president, said a stronger euro would act as a trigger to looser monetary policy.
The rise of the single currency's exchange rate is one of the main reasons eurozone inflation is at a dangerously low 0.5%.
One of Mr Draghi's stimulus options would be quantitative easing (QE).
That is something the International Monetary Fund (IMF) has been suggesting as concerns grow about deflation in the eurozone.
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