

My proposal to create a new banking system - pelle
http://stakeventures.com/articles/2009/07/02/my-proposal-to-create-a-new-banking-system

======
ivankirigin
As mentioned, the regulations are the biggest problem. Rather than scheming,
just make secure webapps from a new country. Having thought it through a bit,
I'm pretty confident micro nation building is easier than taking on banking
regulations.

~~~
pelle
If you want to do something like this in a non US/European country a micro
nation unfortunately is not the solution. I believe a large country like
China, Russia or Brazil who isn't too worried about the OECD sanctioning them
are the only options.

I worked on a payment startup in Panama for a couple of years and know people
who have attempted the same in various other offshore jurisdictions. The
problem with financial innovation in these places is that you their own
regulators are really scared of international sanctions.

Unfortunately in the end I think the best thing to do is to innovate from a
grassroots level in the US or Europe. I would never have said so 10 years ago.
But the OECD have been very effective in their campaign to scare previously
innovative regimes.

------
fatdog789
_Biggest red flag_ No regulators == no means to protect depositors, and no
means to punish bad actors. History has repeatedly proven that the market
itself is not sufficient to regulate bad behavior _because_ it depends on the
participants choosing to remain in the market, rather than amassing an ill-
gotten fortune and then pulling out.

 _2ND biggest red flag_ : There is significant risk, but absolutely no
incentive for bearing that risk (i.e., interest). Interest exists, and indeed,
is based upon incentivizing people to take risks with their money. That's why
higher-risk investments have higher interest rates and returns.

It doesn't provide any means for the bank to make profit, ergo, no incentive
for banks.

It doesn't provide sufficient security measures to protect
money/ecurrency/whatever that's held in these accounts. Even worse, b/c it's
electronically based, it's dependent on power supply. This won't work in most
of Africa, and large/undeveloped portions of India or the Middle East.

It doesn't provide any means for "trust", which is the foundation for the
entire banking system. Example: I don't care what Joe Flo says about you on
Facebook; I don't care if a million of your virtual friends say you are
trustworthy: I want actual data, or I won't lend you squat.

 _Final Red Flag_ (Possibly the biggest) -- _Where does the money come from?_
It states that the amount of money in circulation is the money deposited by
people, but where does the deposited money come from? What about people born
after the system is created? Do they get starting cash to deposit, or are they
screwed?

