Kalistani Major History

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Kalistan Central Bank Clarifies law for Community Banks
"Independence requires conservative practices," says Bank Chief
Kaliburg, Ananto
September 19, 5341


Central Bank Director Howard Fallon delivers Keynote Lecture at Republican Economic Conference in Kaliburg

The annual All-Kalistani Conference of Economists was held at Kaliburg Polytechnic Institute last week, and featured the standard bevy of papers on economic theory that one would expect from a Kalistani economic conference. Most panels dealt with topics such as zero-growth vs. degrowth, while others discussed economic prosperity in the Dual economy.

One panelist announced "It is Kalistan's stability that ensures Kalistan's success. Understand: This runs contrary to every facetious statement ever uttered by both Liberal and Metzist economists, Metzism itself being a natural product of liberal economic thought. The Liberals will claim that producers demand stability. But really what they thrive on is chaos, because the only way they grow is by gobbling up their competition. This produces turbulence in the economy, where many lose and a few win. And each cycle of chaos in a free market system produces fewer and fewer winners and more and more losers, which produces the effects for workers that the Metzists incorrectly attribute to the malice and greed of the producers. In fact, the cycle would indeed produce private monopoly, like what exists in Trigunia, where they do vivisection for profit, if the liberal government, in the name of protecting the business cycle that allows economic actors to generate wealth, unnecessarily inserts itself into the cycle, breaks monopolies, and ensures competition. It is not the stability that Liberals seek, but instability, while Kalistan's economic policy seeks stability, regularity, and zero economic growth. It is THAT stability which ensures that we can properly plan specific segments of the economy to meet need, while ensuring space for the private sector to produce things people want on demand."

Boilerplate and non-controversial lectures on zero growth and economic stability were overshadowed by the delivery of the Conference's keynote speech by Director of the Republican Bank, Howard Fallon, who discussed a clarification in banking laws which may lead to attracting new investment from overseas and from here at home. Titled "Kalistan's Community Banks: A new Investment Vehicle", the director suggested that given the dual system in banking, there was certainly nothing preventing Kalistani investors from teaming up with foreign investors to start new investment entities. "The thing about the Kalistani economic model is that it aims at stability in all its various facets. But then again, the law in Kalistan allows for casinos too. So I ask, fundamentally, at root level: what is the difference between an investment bank and a casino? Well, the answer to that question is simple: The casino is more honest than an investment bank. When you go into a casino, only a moron believes they can beat the house. When gambling in the stock market, all investors are shown to be morons, because there is an implicit promise of return on investment, when there is no way to guarantee such a thing without running a ponzi scheme."

The Central Bank Director drew laughs from his statements, but also encouraged a sober evaluation of the private banking situation. "Right now, when we survey the banking institutions outside of the Central Bank, we see small entities which are little better than piggy banks for investors. If you want your money to grow at a snail's pace, invest in a credit union: Those institutions offer people in communities the opportunity to invest in their neighbors, because the money that is invested in a credit union is available to serve as loans for small businesses, and automobiles and houses. Obviously the social economy in Kalistan makes many of these loans utterly unnecessary, and so they tend to be low activity institutions where both volatility and incentive to use them as money generating institutions are both extremely low-- one gets better rates of return from the Central Bank. The other main type of local private bank is the commercial bank, and they serve primarily to guarantee the transfer of funds from one commercial entity to another. I don't mean point of sale transactions, but large scale transactions that involve sometimes hundreds of millions of rubles. They are primarily not a money making institution either, in that they act as agents for transactions to ensure trust. Home escrow accounts are also found in these institutions."

But why, asked Director Fallon, "shouldn't there be an opportunity for those with money to try their luck to make themselves more money? Why don't we have banks that facilitate gambling in the stockmarkets, act as stock agents, and make money for their shareholders from transaction fees? It would seem to me to be a no brainer that this would be a good opportunity for foreign capital and Kalistani capital to work together for the explicit benefit of their own shareholders? And since this sort of activity exists almost entirely outside the realm of need, the only interest the Kalistani Government would have in such an institution is that the institution keeps whatever legal agreements it makes with the people it is accepting money from."

The Director of the Central bank stated that some entity like this does not fall within the scope of the Republican Banking Act, and hence it would remain mostly unregulated. "Since an institution like this would be serving as an agent, its fiduciary responsibly would be to its clients. And to itself. It obviously would not ever be large enough to have an effect on the stability of the Ruble or the Kalistani economy itself, but in economies that are more open to the moves in their own stock markets, and while we are aware that even small jitters in the stock prices can cause paroxysms in liberal states, the duty of this institution is to turn a profit for its investors. If other economies are sunken by the actions of a few investors in Kalistan, first off that would be fairly wild in its unlikeliness, but second of all, perhaps that should be a wakeup call to other states to protect themselves from liberalism."

The speech concluded with Director Fallon announcing the formation of a working group to study ways to bring investment banking to Kalistan, as well as drafting a set of limits to insulate the fortunes of the bank from affecting the vaunted stability of the Kalistani Economy, and to ensure that any bank of this nature fully conform to Kalistani Statute and the Charter of the Republican Bank. Fallon received scattered applause, while some economists raised questions about the possible embrace of liberalism, even in this limited form, by the Director. Fallon brushed off the objections noting that there is plenty of free enterprise under the dual system, and he is confident that those working on the subject will ensure adequate guardrails to keep Liberalism in check within the Republic. "Independence requires conservative practices, but at the same time, choking out non-essential economic activity is also not a good idea."