Douglas Carswell MP's Bill – Full Text

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Douglas Carswell’s Private members bill has been published by the House of Commons, and can be read in its original form on the link below. The second reading of the bill is due to occur this Friday (19th November) in the House of Commons.

Download the bill here: Financial Services (Regulation of Deposits and Lending) Bill (from UK Parliament website)

What Does It Do?

Although the bill keeps it short and sweet, it implements full-reserve banking within the existing financial infrastructure. It requires banks to offer two types of account:

  1. A ‘custodial’ account - any money that you put into a custodial account will remain your property, rather than being the property of the bank. Consequently, the bank will not be permitted to use this money to make loans or invest. Such an account would offer all the same services that you get from your current account, and wouldn’t need to be guaranteed by government (because the money would remain in that account waiting for you to withdraw it).
  2. A ‘lending intermediary’ account – any money put into these accounts would effectively be a loan from you (the saver/investor) to the banks (who would be the borrower). The bank could then use this money to make investments and loans. As the investor/lender, you would lose access to the money whilst it is being invested, and would need to agree the date (or fixed notice period) upon which you want the money back.

Basically, banks under this system would invest the money that you want investing, and keep safe the money that you want to be kept safe. They would no longer keep up the pretence that the money in your current account and savings account is safe when they have actually  used it to make a loan to a NINJA (no income, no jobs or assets) in sub-prime America.


  • This would remove the need for deposit insurance, meaning that the taxpayer would not be liable for failing banks
  • It would make banks significantly more stable and immune to a bank run
  • It would indirectly make it impossible for banks to ‘extend credit’ – in other words, to create money out of thin airs – and would therefore remove the subsidy that the public pays to the banks every single year by allowing them to be the monopoly supplier of money to the real economy.

A much more detailed proposal for full-reserve banking is given in Positive Money’s submission to the Independent Banking Commission.

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  • Tony

    It seems to me that the propose of this bill is to allow fractional reserve banking to be legalised through the back door, so that just before the pyramid system finally crashes, you can change the law to allow it by introducing deposit-taking accounts, or as you call it, “A ‘lending intermediary’ account” for investment purposes.

    This is what MPs Douglas Carswell and Steve Baker seem to be saying their future goal is.

    Then you would have open disclosure by the banks, giving them the get out of jail excuse, we told our customers and that’s what they wanted.

    So I think the important question here is, wither you are introducing this bill because it is the right thing to be done or wither you are introducing this bill because this is what the banks actually want?

    To see the truth in this asked yourself this one simply question, who will most benefit from this bill?

    It seems to me it is better to completely get ride of a corrupt system than to merely change its name.

    It also seems to me that there are two problems.

    1. Fractional Banking
    So get ride of it completely.

    2. Interest charges.
    Correct me if am wrong but there is a finite amount materials in the world and an finite amount of workable hours in the world and that is what in fact pays the “interest” part of the loan.
    Since money is in fact “debt money”, there can be an unlimited or infinite amount of it printed. However when it finally reaches the point where there is not enough material or workable hours to pay back the interest part of the loan then the system will also crash.

    We can head this disaster off by eliminating interest, which could be done by having one government controlled bank and one government controlled credit card company, which charged either no interest or only enough interest to cover its expenses, putting back any profit into the economy.

    Can you imagine the amount of extra disposable cash that would generate for both people and companies. Not to mention that the government would have a tighter grasp of the amount of national debt.

    Also isn’t it interesting that this bill was introduced at the same time as the world’s attention and every single paper in the U.K. if not the world was focused on the Royal engagement!
    Friday 19th November 2010

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