July 02, 2016
Sir, Kenneth Rogoff writes “Brexit-style votes are the last thing a faltering world economy needs” July 2.
But he also refers to Professor Bruno Frey, who “for example, argues that the threat of referendums helps break up coalitions of entrenched politicians engaged in monopoly behaviour inimical to public interests [and] that referendums produce healthy debate and a more informed electorate.
And how I wish we could hold a referendum on our current bank regulations. Here the questions:
“Do you agree with that those who already find it hard to access bank credit because they are perceived as risky, like SMEs and entrepreneurs, should find that even harder because bank are told to hold more equity when lending to them than what they must hold against assets perceived as safe?”
Or: “Do you agree with that those who already find it easier access to bank credit because they are perceived as safe, like governments and the AAArisktocracy, should find it even easier when banks are allowed to hold much less equity when lending to them than what they must hold against assets perceived as risky?
And the against campaign would remind the electorate that the most important social function of banks, the reason why we taxpayers support them, is to allocate credit efficiently to the real economy, which includes lending to those “risky” that can help the economy to move forward so that it does not stall and fall.
And the against campaign would remind the electorate that all major bank crises have always resulted from excessive exposures to what was ex ante perceived as safe and never from exposure to what was perceived as risky.
PS: UK’s decision to enter EU, 1975, was also subject to a Brexit type referendum. The result 67% * 65% = 43.5% for YES