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An argument for banking deregulation is presented. Topics include support for private clearing systems, the evolving definitions of money, the role of reserves against deposits, the ending of government subsidies for the banking industry, and the implementation of collateralized deposit insurance.

A proposal by Hugh Thomas for banking deregulation is examined, focusing on the points of the proposal, its shortcomings, and the manner in which the proposal would reduce the benefits gained by banks' ability to create money. Topics include Thomas's proposals for a real-time, gross payment settlement system; the demonetization of banks; and the abolishment of government safety nets.

An argument against a proposal by Hugh Thomas to deregulate the banking industry is presented. Topics include the specifics of Thomas's proposal, which amount to a nationalization of US money; and the benefits of more genuine deregulation, which would eliminate government guarantee of bank deposits and allow banks to provide customers with mutual fund accounts; and the ultimate goal of an efficient payment system.

Democratizing the payments system, demonetization of banks, and repudiating government guarantees will produce significant savings for society, despite initial costs. This deregulation of banks will reduce the regulatory burden and costs of government supervision while increasing efficiency in capital allocation.

Most Indonesian banks became insolvent in the wake of the Asian financial crisis and required large-scale government intervention to prevent collapse of the nation's banking system. The vulnerability of Indonesian banks can be attributed to loss of funding, risky loan practices, low capitalizaion, and lack of governmental supervision. Even though the government was able to prevent a system-wide collapse of the banking system, its actions are unlikely to cure the system's fundamental problems.

The enactment of the Riegle-Neal Interstate Banking and Branching Efficiency Act in Jun 1997 is expected to produce benefits similar to that accomplished through deregulation of the industry. These include enhanced economic growth, lower loan rates and reduced banking costs. Pertinent provisions of the Act deal with the removal of geographic barriers to bank expansions and the creation of multistate banking franchises. However, the Act's positive impact could possibly be minimal because deregulation has already provided key benefits to the banking industry.

The banking crisis in China raises questions about the country's financial health. Although the short-term outlook for the country is positive, long-term stability remains uncertain. This uncertainty can be explained by looking at the institutional structure legacy of China's old communist regime and its conflict with the liberalization agenda. Loans made to state-owned enterprises went bad with increased competition from commercial businesses, and drove banks to near collapse. Thus, the recovery of China's banking systems hinges on reforms that address this structural problem.

The Korean government's decision to deregulate its financial system during the 1980s proved to be beneficial to its banking industry. The deregulation of Korea's financial system as well as the removal of some of its financial regulations has dramatically improved the banking industry's ability to utilize its resources. Substantial changes in productivity as a result of changing the combination of outputs and inputs are seen as a consequence of Korean banks' response to privatization and deregulation.

The impact of deregulation on the profit efficiency of Spanish savings banks for the period 1986-1991 is investigated. A more realistic market structure is specified, and savings banks are assumed as price-setters in the output market but remain price-takers in the input market. The average difference in forecasted profits between quartiles of the most and least profitable banks was 40%, as shown by efficient measurements derived via the thick frontier approach.

The productive efficiency of 70 Indian commercial banks for the period 1986-1991, covering the ongoing period of liberalization, is analyzed. Data envelopment analysis is used to compute for radial technical efficiency scores. Stochastic frontier analysis is used to elucidate variation in the computer efficiency scores. Publicly-owned banks are found to be the most efficient, and the privately-owned banks least efficient, in using available resources to deliver financial services to their customers.

During the 1980s many regulatory constraints limiting competition in Spanish banking were relaxed or removed, although deregulation came later to savings banks than to the rest of the banking sector. Two consequences of partial deregulation of savings banks have been a rapid growth in branching activity, much of it geographically dispersed, and a burst of merger activity. In this paper we investigate productive efficiency, and total factor productivity change, in Spanish savings banks over the 1986-1991 post-deregulation period. Neither branching nor mergers provide an adequate explanation for the magnitude or the nature of the productivity decline we observe over the period. Keywords: Banking; Productivity; Malmquist index

Financial reforms in China aim to facilitate the transition to a market-based financial system. The 1995 central and commercial bank laws have stimulated the growth of an effective banking system, based on commercialization of state-owned banks and modernization of their accounting system. Phased liberalization has boosted developments in the money and capital markets. The future emphasis will be on setting up of a nationally integrated interbank market and the liberalization of the interest rates and exchange system.

The Taiwanese banking industry should be overhauled to dissolve political ownership and settle conflicting interests. The banking system faces structural problems and needs long term remedies. If left unattended, these problems may create a financial and economic quagmire. The industry's aggressive marketing strategy during the 1980s promoted expansion with less focus on solvency and safety of deposits. With the government unwilling to intervene, banks are now burdened with increasing risks and deteriorating asset quality without adequate capital reserves.

Indonesian's private banks, freed by the government's deregulation, are likely to become the industry leaders, since they are more thoroughly modernized than the state banks. The state Bank Indonesia is asking private institutions to take over failing banks as part of stabilizing the industry, which had been rocked by the 1992 Bank Summa liquidation and scandals involving the Development Bank of Indonesia. Indonesian government began deregulating the country's banks beginning in 1983, part of a general trend in Southeast Asia towards bank liberalization. Both private and state banks will have to find ways to handle Indonesia's many nonperforming loans.

A study endorses theories regarding the feasibility of deregulation of bank intermediation on the basis of two important provisos. First, the risks that are undertaken should be met by owners and executives, thus protecting the money of depositors and creditors. Second, the reliance on monetary authorities to achieve price-level stability is important for safe and secure banking. In this way, self-regulated banking systems can limit their inside money issues under private market arrangements.

A study evaluates theories on bank self-regulation and refutes the alternative schemes put forward by Michael Bordo and Anna J. Schwartz for bank self-regulation. The Bordo-Schwartz monetary-base rule is merely one component of proposed free-banking reform and monetary laissez faire. Complete deregulation and adoption of a gold or frozen-fiat standard is not possible, nor can politically based regulatory agencies be depended on to serve the depositors' long-term interests. A free-banking reform based on a frozen stock of fiat money is proposed.

The passage of the Garn-St Germain Depository Institutions Act of 1982 was a legislative response to the plight of the thrift industry. The Act broadened the asset/liability powers of thrifts and granted regulators emergency authority to aid failing institutions. In this paper we analyze the effect of the Act on the market returns of large S&Ls and banks using a two-factor estimating procedure. Single-factor models of depository institutions' returns produce biased estimates and confound the Act's interpretation. Explicit treatment of the event/risk interaction is necessary to avoid ambiguities in the interpretation of the Act's effect on the returns of depository institutions. It is difficult to use capital market data to pinpoint the effect of information flows on complex regulatory changes., Analysis of the effect of the Garn-St Germain Depository Institutions Act of 1982 on the stock returns of large savings and loans institutions (S&Ls) and banks was conducted. A more complete model of the return-generating process of depository institutions was used to provide a new perspective on the topic. The results indicate that the Act lead to a substantial drop in the mean abnormal returns for large banks but not for S&Ls. The results also suggest that intervention models are useful in wealth transfer prediction only upon the isolation of truly unique regulatory events.

The banking crisis of the late 1980s, which fell most heavily on savings and loans, has its roots in a century of bank law reforms designed to prevent the bank runs common in economic panics and depressions. The Glass-Stegall Act of 1933 was the first step in the creation of a national deposit insurance system. Its success hinged on regulations that limited the rate of interest banks could offer savings depositors. Once these and other regulations were eliminated, the groundwork for the 1980s crisis was laid.

Deregulation has had no significant effect on the economic efficiency of the US banking industry. A nonparametric frontier methodology was used in measuring overall, allocative, technical, pure technical, and scale efficiency of 669 banks prior to and after deregulation. Results indicate that overall, scale, technical and pure technical efficiency have declined after deregulation. Minimal technical innovation was also evident among the sample banks during the period involved.

The pace of deposit deregulation increased rapidly in the 1980s. However, considerable disagreement still exists regarding the effects of deposit rate deregulation on the interest-elasticity of monetary aggregates. Thus, the hypothesis that deposit rate deregulation increased the interest-elasticity of the demand for money was investigated. The study protocol involved a short-run nominal adjustment specification for M1, M1A and M2. Tests using sector data were also conducted to independently examine the impact of deregulation on each sector. Results showed that the hypothesis cannot be rejected. This supports the opinion that deposit deregulation has increased M1, M1A and M2. The implications for monetary policy are discussed.

A summary of the savings and loan (S&L) deregulation debacle in the US is presented. While economic deregulation of the S&L (thrift) industry in the early 1980s was considered basically sensible, it had been delayed for far too long and came at a time when the industry was already in financial trouble. A tightening of safety-and-soundness regulation, which was actually loosened at the time, would have helped to alter the disastrous outcome. Several directions for reforms in the industry are also outlined.

The implementation of the Basle Capital Standards for banks in Japan, US and Europe exemplifies successful international economic cooperation. However, underneath this facade of improved banking regulation, an approach for the risk-weighting of various bank investments has led to the lending hesitancy of US banks. Extension of the compliance period, adoption of a waiver procedure and the eventual removal of the risk-weighting system are seen as the possible solutions to this problem.

State strategies to deregulate interstate banking during the period 1982-1988 are explored in this study. The strategies are arrayed on a continuum to arrive at a measure of market expansiveness. The determination of market expansiveness is then tested using concepts drawn from the contemporary public policy literature, such as interjurisdictional competition and state opinion liberalism, and other policy-specific variables such as bank failures. Interstate competition and economic crisis are found to be significant influences on the determination of market expansiveness. These results are then discussed in a framework that attempts to reconcile them with other studies of policy outcomes.

The savings and loans crisis can be traced to excessive regulation and federal deposit insurance which was responsible for the high cost of the debacle and abuses which resulted from the government sponsored efforts to protect the industry. Some of the recommended measures to solve the problems include the application of consistent closure standards across the board for all institutions, tougher capital standards and an effective examination process enforcing the capital standards.

After close to a decade of the rapid deregulation of Australian banking, for the first time, the policy debate centres on deregulation's effects on the consumer. The Parliamentary Inquiry into the Australian Banking Industry chaired by Stephen Martin, which reported in November 1991, agreed with consumer groups that deregulation has not delivered all the envisaged benefits to ordinary Australians. It recognised that market forces alone were not sufficient to ensure that bank services were delivered equitably. However, it rejected consumer recommendations for a statutory banking code and regulatory controls to ensure banks met their social obligations. Though the Martin Committee Report is valuable in that for the first time the consumer experience of deregulation was detailed, the Report suffered by not seeing consumer protection as the major policy question. It suggested remedies without focusing on implementation. Moreover, issues of the future, such as the safety of superannuation savings, were not resolved, and the security of electronic networks was not considered.