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Banking

“You should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.” 
Jesus Christ, Matthew 25:27

Banking and the national debt

The Christian Party believes that a strong Bank of England is necessary. The Bank of England, as our central bank, principally exists to deal with four types of crisis: liquidity, bad lending, leverage and unforeseen circumstances. 

Britain’s money should belong to the nation instead of to commercial banks.  At present, all of the nation’s money (apart from 3% that is state-created notes and coins) is a debt by the nation to the commercial banks, whom we authorise to create money at little cost so that we can borrow it from them at interest.  Rather, the nation has the sovereign ability to create money itself – as an asset of the nation instead of being a national debt to commercial banks.  The Bank of England should service this on behalf of the nation.​
 
This subject was high-lighted in the Financial Times by Martin Wolf, one of its editors, almost six years ago.  He exposed the current system – “Strip private banks of their power to create money” http://t.co/cyyaRhs5RM.  It is about time too, but instead of addressing the issue, in the interim cryptocurrencies have developed to challenge central and commercial banks.

“Strip private banks of their power to create money”
Martin Wolf, Financial Times

The Christian Party believes that banking is a special area of commerce, which is essential to the wellbeing of our economy. Key to the success of the banking system is the role of central banks. In the United Kingdom that means the Bank of England.
 
The banking system survives on confidence, and public confidence in the commercial and investment banking sector has been severely shaken.  Commercial and investment banking should be clearly separated as far as liability is concerned. The inability of the banks to adequately capitalised themselves in the good years, leading to a run on the banks in the lean years, has not been adequately addressed. This is giving capitalism a bad name and is contributing to the global anti-capitalist agenda.
 
We believe that state-created money, administered by the Bank of England, has the following advantages: it will 1. improve confidence in and security of the money supply, 2. give ownership of the financial system to ordinary citizens, 3. improve accountability for money lending, 4. reduce the national debt over time to zero, 5. shift the balance of Government revenue from taxation and reduce borrow, 6. thereby releasing funding for public projects to drive the economy.  As assets build up, the government will be able to reduce taxes because interest on borrowing offsets the need to raise taxes.

Synthetic transactions have introduced betting upon financial transactions, increasing the leverage of risk.  Bankers were more focussed on their bonus than on the risk to their clients.  If bankers will not assess the risk of lending to their over-stretched clients, the Christian Party will promote schemes to help borrowers not to overstretch themselves with excessive debt and find other ways to incentive bankers to properly assess the risk to their clients.

Paylenders and corporate business models

The attempt by the Church of England to outflank payday lenders by promoting credit unions is another symptom of our failing banking system. http://www.bbc.co.uk/news/uk-27607947

In line with the Christian Party’s debt free policies the Christian Party will make it a priority to address the extortionate rates of payday lenders. In 2013, the Office of Fair Trading acknowledged there is widespread irresponsible lending but it has taken too long for the government to respond with a cap on the cost of the loan including fees and interest rates. It is estimated that up to £1.8billion is being lent by payday lenders with up to 2 million people using this type of loan. It was  estimated in 2012, that there were over 40 payday firms and 2,000 high street payday shops. There are still 40 payday firms as of 2020.  The Christian Party believes that an APR up to 2,225% is exacerbating the problem of debt and is an abuse of vulnerable people.

The Christian Party believes that organisations such as Credit Unions and Christians Against Poverty (CAP) should be encouraged, as well as national money management schemes through PSHE education to teach school pupils at a young age to handle money wisely.

The number of corporate failures of household names in recent times demonstrates that the credit crunch lessons have not been learned.  Instead of growth being founded on excessive or unsustainable debt, the Christian Party will encourage better governance and promote more accountability to shareholders.

Corporate failures are too easily explained away by ‘market conditions’ and the Financial Services Authority failed to reign in the banks.  Fraudulent activity has affected millions of small investors before the FSA has stepped in to prevent it.  

In spite of the Parliamentary Banking Commission in 2013 calling for senior bankers to be jailed for reckless misconduct, this has not happened.  

The greed, gambling, hidden risks and plain lying manifest in the subprime mortgage market which provoked the 2008 financial crash has not been addressed.

The investigation of three former executives of Barclay bank, the only bankers charged from the 2008 financial crisis, took over 8 years; the prosecution process took 3 years; the trial took one year and it took the jury just 5½ hours to acquit the three executives of fraud because they were the wrong people to blame because their decisions were approved and negotiated at the top of the bank and signed off by the bank’s top lawyers.

Such behaviour adversely affects Britain’s reputation for financial services and gives unnecessary ammunition to the international anti-capitalist forces working to diminish our standing in the world.  The Christian Party will address this and we will promote compensation schemes for shareholders from heavy fines upon senior executives responsible for corporate malpractice.  We will implement more transparency in funding-raising to minimise the risk to investors and restore banking to its fundamental role as financial risk assessors.

Savings and investments

The Christian Party is committed to promoting an economy which is driven by thrift and enterprise, rather than by debt and consumerism. As such, the Christian Party does not believe that savings should be taxed, nor investment punished.

“One of the most destructive elements of the current tax system is that it punishes saving and investing with high tax rates and double taxation. ”
Grecu, Andrei (2004) 
Flat Tax – The British Case, London, Adam Smith Institute, p. 11.

Tax on savings and Inheritance Tax are double taxation for which we can find no biblical nor rational basis and should be abolished to help stimulate the economy, reduce credit spending, encourage saving and promote personal responsibility.

Personal saving

The Christian Party supports government initiatives to educate households to avoid debt and to promote saving, highlighted by the cash flow problems both for businesses and household incomes during the 2020 coronavirus crisis.  Creative ways must be found to help students to avoid massive debt.  The party will encourage the promotion of early saving plans and organisations such as Christians Against Poverty (CAP) to help people out of debt and budget carefully.

Christian Party Members of Parliament will:

• Promote personal and corporate financial responsibility
• Promote government creation of money to be managed by the Bank of England instead of national indebtedness to commercial banks

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