Cashless society

[wayneL]

Remember 5 years ago when CBA got fined $700 Million, it’s no wonder banks want to step away from large cash transactions, and are asking more questions.

Basically the responsibility of ensuring that the transactions are anything to do with money laundering or terrorist financing is being put onto the banks, and these are transactions that the bank makes basically no money off. It’s a big risk with very little reward.

CBA fined $700 Million

Yeah, but it's our money.

Add to that the "depositers" status, legally, as unsecured lender, our funds should be at call for whatever reason that is none of the banks business, even if its just to put under the damned bed...

...which is becoming an option. Was Fraser right after all?

 

[Value Collector]

Yeah, but it's our money.

Add to that the "depositers" status, legally, as unsecured lender, our funds should be at call for whatever reason that is none of the banks business, even if its just to put under the damned bed...

...which is becoming an option. Was Fraser right after all?

It’s your money yes, but you are using the banks services and so have to follow their terms of service, and if the government is issuing fines for $100’s of millions you have to expect them to want to make sure their paper work is correct.

If you want instant access to your money, and don’t want to follow the terms of service, put your money in your own safe at home. But if you want all the benefits of using a bank, you have to take the good with slight inconveniences.

Your funds are at call, your can transfer them when ever you like, but if I have $1 Million in cash in my bank account, it’s a bit crazy to think that every single CBA branch needs to have $1,000,000 sitting there just incase I want to withdraw it. It makes perfect sense to me that I would have to give them advance notice for large cash withdrawals, there is logistics that have to occur to make sure the cash is there.

 

[wayneL]

It’s your money yes, but you are using the banks services and so have to follow their terms of service.

If you want instant access to your money, and don’t want to follow the terms of service, put it in your own safe at home.

Your funds are at call, your can transfer them when ever you like, but if I have $1 Million in cash in my bank account, it’s a bit crazy to think that every single CBA branch needs to have $1,000,000 sitting there just incase I want to withdraw it. It makes perfect sense to me that I would have to give them advance notice for large cash withdrawals.

I fully understand advance notice. However the terms of service are very one-sided. We asked unsecured creditors should be able to dictate the terms in reality. Thanks mate also you can unilaterally change the terms as your implied contract. This is grotesquely one-sided and relies on the ignorance of depositors in understanding their position in law.

Now let's introduce the spectre of bail-ins and the deal becomes even more preposterously to the disadvantage of we "depositors".

Apart from everyday expenses and working capital for a business, you have to be nuts to have any substantive portion of your wealth anywhere near a bank deposit.

 

[Value Collector]

I fully understand advance notice. However the terms of service are very one-sided. We asked unsecured creditors should be able to dictate the terms in reality. Thanks mate also you can unilaterally change the terms as your implied contract. This is grotesquely one-sided and relies on the ignorance of depositors in understanding their position in law.

Now let's introduce the spectre of bail-ins and the deal becomes even more preposterously to the disadvantage of we "depositors".

Apart from everyday expenses and working capital for a business, you have to be nuts to have any substantive portion of your wealth anywhere near a bank deposit.

There is multiple Banks, you can always shop around, but as I said it’s pressure coming from the government, so most banks will probably be similar.

Maybe write a letter to your local elected representative if you want laws changed.

I don’t think it is a problem though, so what if you get asked a couple of questions, it might actually save a few old ladies from being scammed. Hell, the coles worker asked me why I was purchasing 5 x Apple gift cards the other day, apparently to make sure I wasn’t being scammed. If they have to show so duty of care so what, it doesn’t bother any one really.

 

[JohnDe]

I fully understand advance notice. However the terms of service are very one-sided. We asked unsecured creditors should be able to dictate the terms in reality. Thanks mate also you can unilaterally change the terms as your implied contract. This is grotesquely one-sided and relies on the ignorance of depositors in understanding their position in law.

Now let's introduce the spectre of bail-ins and the deal becomes even more preposterously to the disadvantage of we "depositors".

Apart from everyday expenses and working capital for a business, you have to be nuts to have any substantive portion of your wealth anywhere near a bank deposit.

I found this interesting -

The current level of competition between bank and non‐bank providers is difficult to assess as many non‐bank providers are funded by the major banks. Meaning there is a lot of smoke and mirrors in the market place.​

https://www.aph.gov.au/DocumentStore.ashx?id=37536f4c-68db-453d-abb3-c9b37096792c

 

[Value Collector]

I found this interesting -

The current level of competition between bank and non‐bank providers is difficult to assess as many non‐bank providers are funded by the major banks. Meaning there is a lot of smoke and mirrors in the market place.​

https://www.aph.gov.au/DocumentStore.ashx?id=37536f4c-68db-453d-abb3-c9b37096792c

The Author makes a mistake in the very first sentence. They seem to be suggesting that CBA doesn’t distribute its profits through the community, which of course it does.

A quick check of CBA’s 2022 Annual report shows that there is 873,833 share holders which by itself is a large number. But some of those 873,833 share holders are super funds representing large pools of investors also, so the actual number of Australians owning CBA shares either directly or indirectly is very large.

Add to that the number of people that have capital invested in the bank as bonds and other securities and there are many more thousands.

Then you have the thousands or staff and contractors taking wages, and the billions in taxes paid.

The author makes the claim that the bank doesn’t exist to benefit those that can’t afford to buy its shares, but as I already showed almost everyone would own the shares in their super, and those that can’t afford to buy shares and don’t have super probably don’t do much business at the bank anyway, but still benefit from the taxes the bank pays.

The banks profits certainly do flow right through the whole country, either as dividends, interest, wages or taxes. The benefits of the banking system also help many small businesses and trades people by supplying loans to their customers.

 

[wayneL]

Maybe write a letter to your local elected representative if you want laws changed.

Hahaha are you serious?

I go one better bro, I turn up at their functions. My local member is a nice chick but farkin useless... Has no actual understanding of what bail-in even means.

The last member couldn't even be bothered responding to any of my emails.

They do not represent us whatsoever.

In any case banking rules are largely determined extra-nationally.

 

[farmerge]

My foolproof way to attract rain is to get the slasher or ride on out for a major session
Try it....

And the drizzle did evenuate this arvo so it was a fizzog.

 

[JohnDe]

And further comment about our banking competition -

Australia's four biggest banks continue to get bigger, increasing their market dominance and making it harder for smaller banks to compete in the already consolidated industry.​

​

The bigger banks can generate returns on equity above their cost of capital, "but for smaller banks it's tough given they have a funding and operating cost disadvantage," Zaia said.​

​

Big getting bigger​

​

Although the big four still compete among themselves, the high market concentration has been a concern for the Australian banking system. In recommending changes to the industry, the Royal Commission, which investigated misconduct in the nation's financial services industry between 2017 and 2019, stopped short of top-to-bottom reform, though it found irregularities and illegal practices by banks.​

​

As Australia's big banks keep getting bigger, competition concerns grow

The concentration of the four biggest lenders in Australia has long been a concern for the nation's banking system. This was accentuated by Australia and New Zealand Banking Group's A$4.9 billion acquisition of Suncorp Group's banking unit in August.

www.spglobal.com

​

​

​

 

[Smurf1976]

My foolproof way to attract rain is to get the slasher or ride on out for a major session

From past experience I recommend major outdoor works of the kind that once started cannot be paused and must carry on uninterrupted for many hours.

This is remarkably effective at bringing the most miserable conditions imaginable.

 

[Value Collector]

Hahaha are you serious?

I go one better bro, I turn up at their functions. My local member is a nice chick but farkin useless... Has no actual understanding of what bail-in even means.

The last member couldn't even be bothered responding to any of my emails.

They do not represent us whatsoever.

In any case banking rules are largely determined extra-nationally.

Then vote in better ones, or maybe run yourself.

Or if you believe the banks really to have some sort of special position with strong risk less earning power, then buy some shares.

 

[wayneL]

Then vote in better ones, or maybe run yourself.

Or if you believe the banks really to have some sort of special position with strong risk less earning power, then buy some shares.

Wut?

And wut?

a/ you cannot be serious, bro... LMAO

b/ I own banks to he extent I believe they are good investments... underweight atm

 

[Value Collector]

Wut?

And wut?

a/ you cannot be serious, bro... LMAO

b/ I own banks to he extent I believe they are good investments... underweight atm

No, I am not being serious, except to point out that if you want the banks to act differently rather than blame them you should be blaming the people that write the laws they are being forced to comply with.

 

[wayneL]

You

No, I am not being serious, except to point out that if you want the banks to act differently rather than blame them you should be blaming the people that write the laws they are being forced to comply with.

You should trying punctuation so folks don't have to read it three times.... anyway.

I am not blaming anyone, just pointing out the reality of the disposition of our deposits; and perhaps positing there a may be less risky alternatives.

You seen to be going off on intellectual (and irrelevant to the discussion) tangents.

 

[sptrawler]

And further comment about our banking competition -

Australia's four biggest banks continue to get bigger, increasing their market dominance and making it harder for smaller banks to compete in the already consolidated industry.​

​

The bigger banks can generate returns on equity above their cost of capital, "but for smaller banks it's tough given they have a funding and operating cost disadvantage," Zaia said.​

​

Big getting bigger​

​

Although the big four still compete among themselves, the high market concentration has been a concern for the Australian banking system. In recommending changes to the industry, the Royal Commission, which investigated misconduct in the nation's financial services industry between 2017 and 2019, stopped short of top-to-bottom reform, though it found irregularities and illegal practices by banks.​

​

As Australia's big banks keep getting bigger, competition concerns grow

The concentration of the four biggest lenders in Australia has long been a concern for the nation's banking system. This was accentuated by Australia and New Zealand Banking Group's A$4.9 billion acquisition of Suncorp Group's banking unit in August.

www.spglobal.com

​

The bigger the better IMO, the 87 stock market crash showed what underfunded over extended banks that had to source most of their funds from overseas, look like. ?
Or take a look at the U.S, EU banking fiasco's I think in the last 30 years the big four have done a pretty good job of giving the plebs confidence that they don't need to do a run on the banks and put the money under the mattress.
There isn't many countries that can say that.

 

[farmerge]

From past experience I recommend major outdoor works of the kind that once started cannot be paused and must carry on uninterrupted for many hours.

This is remarkably effective at bringing the most miserable conditions imaginable.

Like laying cement for footings or a housepad. Guaranteed to bring on a weather change.

 

[JohnDe]

The bigger the better IMO, the 87 stock market crash showed what underfunded over extended banks that had to source most of their funds from overseas, look like. ?
Or take a look at the U.S, EU banking fiasco's I think in the last 30 years the big four have done a pretty good job of giving the plebs confidence that they don't need to do a run on the banks and put the money under the mattress.
There isn't many countries that can say that.

As a shareholder of big banks, they have your mind where they want it.

"We all agree our robust banking system is overwhelmingly an asset for Australia, so we don’t want any policy measures to undermine what is in many respects the bedrock of our economy. But increasingly, Australians are recognising the oligopoly arising from the market power of the big four banks does come at a cost. And that burden is carried by the customer through a lack of competition."​

Big is good, but like anything that gets too big it tends to become full of bureaucracy, heavy doors and closed windows. What is the difference between a bunch of politicians, public servants and big bank management?

They spend most time with the upper end of town and forget what the small person and youth need. Eventually slowing down progress with red tape, hurdles and paperwork. All the while smothering smaller upstarts that are threatening their competition.

A small bank may not be as safe as one of the big four, but that is mostly due to government backing and huge reserves of assets. With well thought out and implemented rules and regulations customers of small banks can be protected from failure.

With more choice and competition costs can be lower, less smoke screens, and different choices. A big bank may not like cash because of the cost, but a smaller bank may be able to take advantage of a sector of clientele that prefer cash.

If the big four banks keep buying up the smaller banks there will be no competition, because the big four are all good friends of each other.

The banking oligopoly feels ‘safe’, but it’s bad for customers

Today, the major banks secure more than nine out of ten mortgages taken out by Australian homebuyers. The dominance has become more entrenched in the past five years, eroding competition in the sector.

During times of international economic volatility, the strength of our banking system instils confidence across the wider Australian economy.

The financial sector contagion that recently absorbed Silicon Valley Bank and Credit Suisse provided a fresh reminder for governments, companies, small businesses and households in Australia about the value of resilience embedded across our major banks.

We all agree our robust banking system is overwhelmingly an asset for Australia, so we don’t want any policy measures to undermine what is in many respects the bedrock of our economy. But increasingly, Australians are recognising the oligopoly arising from the market power of the big four banks does come at a cost. And that burden is carried by the customer through a lack of competition.

The big four banks have major comparative advantages over their rivals in many areas, including funding mortgages. Compared to the smaller players, the big four start with lower capital costs, enjoy a rating uplift on the back of the implicit government guarantee of being too big to fail, and in times of volatility attract a strong flow of deposits from increasingly anxious customers seeking a safe harbour.

These advantages have helped embed the power of the big four, particularly in the home loan sector. Today, the major banks secure more than nine out of 10 mortgages taken out by Australian home buyers. The dominance has become more entrenched in the past five years, eroding competition in the sector. This is a bad outcome for customers.

Weaker competition plays out for consumers in the form of opaque pricing and the increasingly familiar loyalty penalty, where new home loan applicants are handed discount mortgages at the expense of existing customers.

On the other side of the fence, one source of mortgage funding for smaller institutions and non-banks has been private residential mortgage-backed securities. The RMBS market has a track record running over decades of contributing significantly in efforts to enhance competition in the mortgage market. For home buyers, this equates to improved service and more competitive home loan rates.

Due to cyclical and structural issues, however, the impact of the private RMBS sector can be curbed by external factors. In particular, the impact is limited in environments facing increased risk; that is, the landscape Australia faces right now as it navigates the ongoing volatility in global financial markets.

But there is a solution. And it’s already been road-tested. To sustainably strengthen competition from non-majors and non-banks, consideration should be given to supplementing the private RMBS market with a publicly supported RMBS scheme. It’s an initiative already in place in Canada, which wanted to create a more level playing field for the smaller financial institutions taking on the “Big Six” banking oligopoly.

Level playing field​

In essence, the scheme helps smaller lenders access funding at the same rates as the major banks. The Canadian scheme has been operating successfully for 35 years, and was a global standout during the global financial crisis as a critical and reliable source of funding for all financial institutions despite the market meltdown at the time.


More recently, an independent review by the nation’s central bank concluded “the main social benefit for Canadians of public securitisation is the support it provides for both diversity of choice and access to mortgage financing through a stable, cost-effective supply of funding to mortgage lenders”.

“Public securitisation also supports competition in the mortgage market by providing funding to small lenders, which have fewer alternative funding sources. Financial institutions also benefit from public securitisation by using these highly rated assets to meet regulatory requirements.”

Greater availability of matched funding would help counter any potential run on the banks. In today’s tech-reliant economy, the speed of online real-time banking has made that prospect significantly more difficult to manage. In tomorrow’s world, algorithmic triggers similar to measures already in place in financial markets will play a preventative measure, but for now there is increased reliance on prudent liquidity management.

The Canadian model helps banks avoid problems managing their liquidity by lowering the mismatch risk on banks.

If adopted in Australia, the system should be available to all banks, including the majors. The fee structure would be tiered to align with the philosophy of a shaping a more level playing field.

In preparing for next month’s budget, Treasurer Jim Chalmers is inevitably poring over a mountain of budget submissions, including proposals extolling the virtues of the Canadian MBS model. The scheme would be familiar to the government, albeit distantly, having been identified 15 years ago this month as one of the more interesting ideas to come out of the Rudd government’s 2020 summit.

To assist the Treasurer, the 2020 report suggested the scheme would “ensure a relatively low-cost and stable source of financing for housing”. Given the pressures facing homebuyers in 2023, proven policy measures that generate competition in the home loan market deserve serious consideration.

Greg Medcraft is a former chairman of the Australian Securities and Investments Commission, a former member of the Financial Stability Board and a former director of OECD Directorate for Financial and Enterprise Affairs. He is chairman of Australian Finance Group.

 

[moXJO]

If your bank is hacked from its end, that has very little to do with whether you choose to use cash or digital payments in your daily transactions.

Well actually it does. Cash in my pocket doesn't get hacked. I've never been robbed of cash. Three guys tried once. But I would walk around in the worst areas.

Big concern will be ai and its damage to the system.

Did I mention that I collect coins?

When ever I get change I check the coins, I’ve built up a nice collection of rare and valuable coins from the change that I receive from using my cash over the years. The coins that aren’t of any interest for me I leave on the kitchen bench and they disappear for someone else in the family to use & enjoy.

I do as well. Turned a few coins into hundreds$ with/for the kids. One of my 7yo is a bit of a rarity collector. Amazing how clever they are these days.

My old man chucks his spare change in money boxes for the kids.

 

[moXJO]

No, I am not being serious, except to point out that if you want the banks to act differently rather than blame them you should be blaming the people that write the laws they are being forced to comply with.

Well this is the problem. If it's in the bank it can be at risk to the whims of a reactive govt.
Look at Canada as an example. Accounts were frozen.

If you take money out past a certain amount you get asked about it. Your spending gets tracked. There's a lot not to like. But they bank on peoples laziness.

Digital is great for business to a degree (those fees add up). On a personal level it's simply convenience. I'd question if that convenience is actually good for people though as it's very easy to waste money.

 

[divs4ever]

You
You should trying punctuation so folks don't have to read it three times.... anyway.

I am not blaming anyone, just pointing out the reality of the disposition of our deposits; and perhaps positing there a may be less risky alternatives.

You seen to be going off on intellectual (and irrelevant to the discussion) tangents.

guilty as charged , but thanks for highlighting an indoctrination talent i was unaware of having

but have been dyslexic all my life and am somewhere in the ADHD spectrum as well , so my brain might be already on a totally different subject by the third line

cheers

i will watch with interest if cash disappears , digits on a computer screen will create their own consequences ( as anyone who has watched Fly-Buy points would know )