“In Canada, where the banking industry poses relatively little systemic risk, a different solution is now in play. Partnering with the asset management company founded by Toronto billionaire Eric Sprott, Continental Currency Exchange—the largest independently owned retailer of foreign exchange in Canada—is out to create a zero-risk option.”
The “Continental Bank of Canada would remain an unlevered and overcapitalized financial institution, something that isn’t offered by today’s financial services market.”
“Canada’s banks are watching with interest.”
An ancient idea for a brand new bank
By Thomas Watson
November 03, 2011
Banks were around long before the invention of coinage, not to mention paper money. The industry originated in ancient Mesopotamia, where palaces, temples and eventually private operations provided for the safe-keeping of grain and other commodities. Receipts for these deposits could be transferred to third parties. Laws regulating these early banks were included in the Hammurabi code, which did a better job than modern financial regulators at keeping moral hazard at bay. After all, the concept of an “eye for an eye” went a long way toward making early capitalists think twice about taking risks.
Today, as global markets nervously watch to see how much it will cost to save European banks from their willingness to make risky loans, critics around the world are calling for Hammurabi-style reforms to make sure financial institutions, not taxpayers, pay for future bad bets.
© 1999-2011 Rogers Communications. All rights reserved.
* Image reference:
Photo of Eric Sprott, head of Continental Currency Exchange
and Sprott Assett Management, by Silver Circle Movie
This image has been modified.
Original source: http://www.flickr.com/photos/silvercirclemovie/6284163188/in/photostream/
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