FURTHER to Malcolm Parkin’s letter (We should aspire to be free from the control of bankers, December 12), Gordon Brown, when Chancellor, gave private banks the control of currency and reduced banking regulations.

Previously printing of money was controlled by the government through the Bank of England and lending was on a full reserve basis i.e. private banks and building societies could only lend the money which people had deposited with them. Banks are now free to print money. Bank notes only state the private bank’s “promise to pay the bearer on demand five pounds Sterling”. Banks lend several times the amount deposited with them. This is the basis of the current “fractional currency” and relies on the premise that a large proportion of depositors will not “demand” their money in sterling at the same time. We saw how that worked out in 2008. The banks have learned nothing since. Why would they when they didn’t pay. Unlike Iceland, which jailed bankers, we, the UK public, bailed them out and allow them bigger bonuses, even those who recently have criminally asset stripped customers who they were entrusted to help.

Scotland could set up a full reserve currency controlled by the government through a Scottish Central Bank. As we own a large proportion of some banks, when they no longer want to provide a service through local branches, we should take these unwanted assets off their hands and open locally controlled branches to serve local businesses and communities.

Jim Stamper
Bearsden

WITH reference to Malcolm Parkin’s letter, what is full reserve banking and how will ordinary folks benefit? Before Maggie Thatcher de-regulated the banks in 1985, the Building Societies had provided almost 100 % of all house mortgages at competitive rates. They achieved this by attracting depositors’ money with competitive interest rates. They then lent out mortgages only up to the amount of real money that they actually had on their books (full reserve banking). This protected both the depositors and the mortgagees, as the Building Society could not go burst. Unlike the current fractional banking system where the banks lend credit up to twenty times the amount of money that they actually hold. The fractional banking system crashed in 2008, because they did not possess sufficient cash to meet withdrawals, with the taxpayer having to bail them out. With no attempt since then being made to rectify the current fractional banking system it is inevitable that they will crash again. For Scotland to be independent, then the Government must be in control politically and financially. That means a return to a full reserve system under the direct control of the Government using real money again in a debt-free economy. The Scottish Government can then authorise the Scottish National Bank to provide the money to invest in expanding our economy and by means of regulation protect people from the greed of big international banks.

Robert Ingram
Aberdeenshire

AMIDST the turmoil of Westminster politics, Scotland’s Government was getting on with the day job as Derek McKay brought forth his budget proposals for the coming year. It was refreshing to learn that Scotland is continuing with policies of progressive taxation. With any budget there is always winners and losers, but in this budget it is clear where the Scottish Governments priorities lie, further investment in housing (£826 million) to keep on target the government’s own target of 50,000 affordable homes in this parliament’s lifetime.

Catriona C Clark
Falkirk