Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646632048.pdf (Australia)
Senate Standing Committee of Economics PO BOX 6100 Parliament House Canberra ACT 2600 Banking Amendment (Deposits) Bill 2020 Comments and Concerns from confidential I am an Australian Citizen with many generations of heritage in the beautiful state of Queensland.

My submission Is based on my concern this Bill will provide ADI‘s the ability to confiscate customers deposits in the event of the ADI’s insolvency referred to as a Bail in.

What is bail-in?
What is bail-in?

“The process of bail-in is when in a financial institution (i.e.

an Authorised Deposit-taking Institution (ADI)) that is in financial difficulty recapitalises through the process of converting the institution’s liabilities into owner’s equity (i.e.

share equity in the ADI).”(John Adams 2020, Principal Economic Analyst of Adams Economics.)

Examples of liabilities which could be converted are: Hybrid securities - convertible bonds, preference shares and capital notes.
Secured or unsecured institutional deposits; or Secured or unsecured retail deposits.

(John Adams 2020, Principal Economic Analyst of Adams Economics.)

Banking Amendment (Deposits) Bill 2020Submission 185 Studying economics in high school and as a young man in the early 2000s, I understand the operations of the banking system, however puzzling it was never included in the economic curriculum.

I have continued to be curious of how the banking system works.
The Quantitative Easing Strategy that is commissioned by the central banks to tackle the Global Financial Crisis (GFC) of 2007 stated empirically that the banking system was and still is creating the money supply.

This was a shock to many people, and we have always been taught that banks were the ‘intermediators’ that gather the funds in the form of deposits and then lend these funds for a modest profit.
The unpleasant truth is that the global banking system is rigged to privatise profits and socialise losses of which bail-in is the result.

The system is designed that the risks by the bankers in their reckless financial gambling with other peoples money is that ultimately generated not by the bankers but by the households.

The Bank of England confirmed that it now acknowledges that banks create new money when they issue a loan.
This is important to note when we consider the relationships between private banks and the people of Australia.

The ability for the private banks to create money, gives the banks enormous power, and that is where I believe constitutional power has been given to private organisations on behalf of the nation.

This submission has been prepared because I am deeply concerned for the future solidity of the Australian banking system and its declining role as a strength for the good in Australian society.
The history of Australia’s Banks The worst banking crisis and depression in Australia happened in 1893 because of the major property boom during the 1880s.

64 out of the deposit-taking institutions (banks) operating in 1891, by the middle of 1893, 54 of them had closed.

The consequences of the 1890 depression was that the Federal Banking Amendment (Deposits) Bill 2020Submission 185 Government was able to take over the note issue in 1910 and based it on a gold reserve system.
In the year of 1911, the Federal Government created the Commonwealth Bank of Australia.

It was the public national bank that acted as a middleman that was able to exchange and work as a guarantor for all bank deposits.

During the later years of World War II, the Commonwealth Bank Act was formally established and made the sole legal issuer of Australian banknotes that of the Commonwealth bank of Australia.

As they were the national public bank, it served Australian people very well.
It provided a national system of banking branches and post offices.

People were able to exchange for foreign trade and during World War II, it provided finance to conduct the war and the post war victory.

The private banking institutions resented the CBA and called out the bank as being unfair and non-competitive.
After the Governor Denison Miller of the CBA died, the private bankers began their takeover of the bank by promoting the Commonwealth Bank ( amendment ) Act 1924 which replaced the position of Governor with a Board of Directors largely comprised of private bankers.

The CBA was officially dismantled, and the central banking functions was moved to the Reserve Bank of Australia.
From my recent readings of the Australian bail-in , it is clear that if in the event of a bank becoming bankrupt, the customers deposits are subject bail-in- like many different economies.

When a bank is distressed in Australia : Proprietors of derivative products will be paid out in full.

People who hold amalgam bonds will be bailed in(i.e.

the bonds will be cancelled.)

Holders of shares in the bank will see the selling price of their shares fall.
Banking Amendment (Deposits) Bill 2020Submission 185 Deposits ( in full or part) will be converted to bank shares.

If the bank can recoup the shares may be sold to recoup some of the value.

However, if the bank fails – The deposit guarantee ( if the government chooses to save the financial institution) applies to any of the remaining deposits.

This is a vastly different situation that most people perceive in Australia, about their money in the banks.
The government promises to guarantee millions of deposits in privately owned Australian banks.

When we look at the bail-in policy template in action in Cyprus 2013, we can see that the Bank of Cyprus converted 37.5% of the deposits in the bank into shares called “class A shares”, and the additional 22.5% of the deposits was held as a bumper for the possibility of converting in the future and then the remainder of the deposits are frozen, the people were unable to access their deposits within the banks.
One of the key lessons from this crisis is that governments are quick to introduce new banking changes that shift the burden of the bank collapsing onto the taxpayers and save the investors.

The ‘bail-in’ method aims to ensure that banks’ shareholders and creditors – including uninsured depositors- pay their share of costs.
Overall, Customers of the banks who hold deposit funds in the bank should not be liable for the risks taken by the speculative investment activities of the private bankers and their investors.

Gambling with the Australian peoples money is not effective and brings forward more risks for the customers.

Of course, we will always hear the bankers object and argue the thought of gambling and loosing customers money.
When we look at the history, we can use an example of ancient farming – “Ring fences” – built to keep farm animals in and the predators out, however in the world of banking in Australia , it is Banking Amendment (Deposits) Bill 2020Submission 185 about keeping the ring fence around the farm animals and locked in with the predators.

It is disgusting that the Australian senate allowed the Bail-in Bill in early 2017, without the thought of the Australian people.
Senators are now in the position of having the opportunity to investigate and oppose the bill.

Educate yourselves and give the people of Australia about the loopholes and cover-ups of the private banking system.

Australia needs to return to the cautious banking practices, which maintains a separation of private banking from investment banking and then the government can cover the money of the Australian people and not cover the guarantee and pay the shareholders first in the event of deteriorating bank.
Rationalise the risks and benefits and prudently place the risks where they belong.

if changes are successful, Depositors are free of risk over which depositors have no control and will not be able to gamble with Australian peoples money for their own private monetary benefit.
Please Senators , I encourage you to act in the best interest of the Australian people and vote in favour of a reform with the Banking Amendment (Deposits) Bill 2020 Thank you for considering my submission 8th of July,2020 References Banking Amendment (Deposits) Bill 2020Submission 185 ABC news 2018 - https://www.abc.net.au/news/2018-10- 30/australia-most-country-to-risks-of-rising-household- debt/10445814xxxiii Bank of England 2018 https://www.bankofengland.co.uk/knowledgebank/how-is- money-created John Adams, 2020 - Principal Economic Analyst of Adams Economics USA today 2013 - https://www.usatoday.com/story/money/business/2013/07/29/b ank-of-cyprus-depositors-lose-savings/2595837/ Banking Amendment (Deposits) Bill 2020Submission 185