Split-up of Universal Banks: Crisis Prevention or Dangerous Intervention in the Banking System?

The debate over the split-up of universal banks has flared up again. Can splitting commercial and investment banking lead to greater stability in the financial markets? According to Karl Socher, University of Innsbruck, the authorisation of universal banks was one of the causes of the crises in banking, the financial markets, public sector debt and the economy in both the USA and the Eurozone. A dual banking system would help to prevent payment systems crises, burdens from being imposed on taxpayers and over-regulation of the financial market. Ulrich Blum, University of Halle-Wittenberg, does not believe that separating banking into two areas of responsibility goes far enough because this does not represent a change to the system; but sees it as a necessary measure in terms of economic structure. Hans Heinrich Driftmann, DIHK, opposes these arguments. In his view, dual banking systems do not prevent crises from occurring. The universal banking principle in Germany has evolved historically, is well-established and is an important pillar of the social market economy that offers advantages for consumers and companies.