“The largest problem of the absence of Glass-Steagall is the fact that investment bankers use the money that has been collected through deposits of commercial banks, and they just increase the scale of a kind of gambling in the market. And if there is a separation of investment bank and commercial bank , even if investment banks made mistakes and go bankrupt , your government doesn`t have to save them because it does not effect your entire economic system. Those people overly taking risks , just they suffer, it is purely their problem. But if there is no separation then the failure of investment banks leads to the failure of commercial banks where you have people`s deposits. So you have, if commercial banks would fail, then that would have a huge economic adverse effect on the economy. So your government doesn`t have any other option than saving both commercial banks and investment banks and that would bring an incredible level of moral hazard on your bankers. That is the major reason why you need to have this separation.

And the number two point I emphasize is that unlike the United Kingdom, and to a smaller extent, the United States, Australia still has very valuable industries such as manufacturing, mining and most importantly agriculture. So if you have those kind of viable industries, there is a reason why pure commercial banks exist . Basically commercial banks would lend out money and get a part of those industry’s profits in the form of interest while that is not the case I think in the United Kingdom. If you don`t have those kinds of industries which commercial banks can lend out [to] there is no reason those commercial banks can exist.”

CITIZENS INSIGHT – Japan Post Bank: The great postal banking success – Daisuke Kotegawa

15 Feb 2021

Japan Post Bank: The great postal banking success Interview with Daisuke Kotegawa, Research Director at the Canon Institute for Global Studies; Former Deputy Director at Japan’s Ministry of Finance; Former representative of Japan to the IMF. Hosted by Robert Barwick