Jumping Up and Down With Big Mortgage Sharia

Scottish house price index, average house price of Halifax Bank of the United Kingdom by £ 120.137 in January 2003. To position the UK average salary of £ 27,379 (Office for National Statistics New Earnings Survey), the average home prices are on average 4.39 times almost passive. Many more of these areas in the United Kingdom in London, for example is greater than the area of Scotland and Wales is much less far. The following chart depicts, there are ups and downs the house price / earnings multiple over time, and it seems to suggest the market is now closed cyclical high.

Figure 1: Average UK House Price UK average wage of

Source: Halifax Bank of Scotland

Variability of house-price gains is, of course, reflect only the behavior of house prices.Most people know very well, the average British house prices have been constantly increasing most of the last thirty years. In fact, the last three hundred years have gradually increased the most. The following chart represents the recent growth in UK average house price.

Figure 2: Average UK House Prices

Source: Halifax Bank of Scotland

These funds will be aware that to get to know the nature of the modern system of property price increase in a compact way and that a large part of bank and building society is new money created when the loan. Loan recipients spend the money to create new houses (and cars, vacations, clothes and other consumer goods) and, right at the time and expense of the general price increase leads. Bank and building society loans (read "money") increased significantly if the real estate, buy real estate boom, leads usual. Real factors that would affect the house (built in or downloaded, for example, the quality of) the value may be completely overshadowed by economic factors, under these situations. On the other hand, if the credit reduces the property acquisitions, property prices tend to grow or even decline, the slowdown in lending, it is difficult to stop. The following graph the changes in bank loans to real estate and real estate prices shows the relationship between the changes.

 

Figure 3: Annual house price changes in the loan versus the annual change

Source: Bank of England, the publication Economist, Halifax Bank of Scotland

the same data can be plotted to show the relationship between price changes and changes to the loans, ignoring the time element. changes in the strength of the correlation between house prices and loans is now evident (correlation coefficient r is 0.5868 in the second):

Table 4: Annual house price changes in a corresponding change of a draw against the loan

Source: Data Figure 3

interest loans to buy homes from people who use the housing market is a very profitable position, because the credit institutions as a pump money into that house price increases, but each house purchase loan debt that remains fixed in nominal terms. If house prices rose rapidly on the value of home mortgage rate can be reduced very quickly, making the owners richer currency terms, and he sold the house to repay the mortgage. Thus, the profit of entrepreneurs logo) loan money interests, b) buy real estate, c), however, a tenant, d) the sale of assets, e) repayment of debt, f), as the surplus profit through the rental of housing. property prices and rental growth rates to maintain the profitability of the loan is, in fact, used to purchase real estate is greater than the interest rate, as traders continue to win.

People who do not own the property, however, a fairly grim. Imagine in ten years, the individual is now saving £ 50,000 in a house worth £ 50,000. Continuing house prices rise when an individual has to save £ 50,000, a house could be worth £ 100,000 or more. In fact, the value of individual savings over time compared to the price of the house, and house prices have doubled in this period is one half the other way. In short, the main banks and building societies a new devaluation of money, and therefore their business in society as a result of the production was taken as a fraud.

In short, the beneficiaries of the credit institutions are mainly credit institutions themselves (because the interest on loans) and property speculators (whose net worth increased while property price inflation). Too many owners are aware that property prices are really nothing one would need to gain. If I sell my house today and move to another house price increases do not benefit me at all, because it is more expensive to buy than I would sell my existing dwelling, I also have to pay more to buy a house I wanted.

In this context, against the Muslims in the UK has to be decided. can not buy a house, so your property at the foot of the stairs, or the rent would be? home buyers to protect their hard-earned savings in the long term value, as shown in Figure 2 the top buys.The alternative is a commercial disadvantage in the past was different. Of loans without interest to avoid, some of my Muslim friends in London has been since 1960, when Fulham cost of renting four bedroom house £ 3,000. The price of £ 1,000,000 in the same house today. Muslim tenants pay more rent than when it is not, according to purchase a home, mortgage interest, but the irony is many of these people from a Muslim is someone who actually rented a house bought with no interest loans. In addition to the landlord collected rent payment all Muslims, but also benefit from growth in property prices of £ 3,000 from £ 1,000,000. The landlord pays the interest, of course, but in general the last 40 years of mortgage payments to £ 3,000 less than 15,000 pounds, and this is not the general scheme of things, it would be much more.Under the current monetary system, the commercial rental is nonsense, in the long term.

However, if the rent, and the benefits can not be forgotten. Among them, the ability to quickly leave the property and move somewhere else, I'll maintain the freedom and the freedom from mortgage debt. freedom from sin a good Muslim, and the interest payment is greater than all of them.

If you want to buy residential property is not a Muslim, and he decided it was better now than to wait to buy a house if prices fall, the question of how to arrange financing.In this regard, and the few that are lucky enough savings to be made available, many of the Muslim community and was happy that the past performance of the UK Islamic mortgage market. It is widely believed that the financing agreement to support the end of a Muslim "democracy, property owners" want to be part of a long-term lease and to escape the economic trap. Therefore these developments, institutional credit course in the United Kingdom also has a very "Islamic" mortgage that allows the existence of untapped market for the loan you are happy, and the Muslim market, thus generating additional income.

Islamic home financing is not necessarily an Islamic mortgage (family and friends, can not be a mortgage on the property to the lender), the next three Islamic home financing is a small explanation of the existence of patterns in the Western world in general, and especially after the discovery of the United Kingdom.

Murabahah model was first applied to a retail level in the United Kingdom, United Bank of Kuwait (Al-Ahli United Bank, now known as) is. You are a person (the Bank) to buy a house in the 100,000 pounds for a person B (the house the seller) and people immediately C (the client and the future homeowner), the price of the sale, said the same £ 150,000 fee to be paid over 15 years, said. C. A person must begin the process of the character of people promising to buy a house if a person B, Person C then immediately bought A. Person shariah experts, who said that transactions of this house, in writing, is trading (buying and selling homes) and loan interest, and is halal. If traders were to argue the other bank, stock in trade is their home after a portfolio of homes must be owned by any other dealer, when in fact, shares of commercial banks as money. Without a doubt, cynicism among the Muslim community to add some money that flows only when the bank is paying customers since the beginning of the operation, as well as an alternative to interest based on the set is displayed. When seen from the perspective of the bank when the bank transfer of £ 100,000 per person B, person C agreement automatically comes into force, people who pay C £ 150,000 later, the bank will be required. This money-transfer operations of a person B, C as long as people have more to pay a certain amount is later. Money, more money later this week at home, so to speak. Many bankers supported the interests of private transactions, taking into account the standard practice of banks and bank-loan, usually nothing more than the interests of balance sheet assets. Were exceptions to this rule, such as the award jointly issued by the Royal Bank of Scotland mortgage several years ago. You went back to the property being financed banky share price increase. However, in this case, the bank refused to share the house price fall time, and, therefore, a fixed minimum return on funds borrowed at 0%.

Iyár model, according to people (bank) purchases a person B (the house the seller) and the income of that person C (client) from the property. C to set the use value of the building, most modern scholars see the company as an acceptable form of housing. Bank agree to sell the house at the beginning of May Iyár lease at the end of the customer, possibly to 1 pound a nominal sum. Alternatively, customers can apply for a bank to pay a regular amount in a bank account, the amount of payments and the bank agreed to the transfer of ownership of the house will be the client. Iyár Al Ahli in the United Kingdom in the last model.

The Shariah issues in recent years the number of previous operations have been discussed. Al Ahli Iyár rent as a model of market interest rates reset annually on line.Although scholars have argued that this in itself is not haram (why I did not make their profit selling lemonade at the same percentage as the next Guy has sold the beer?) In fact, customers who know what has hired a bank to pay rent until the beginning of each new year. If interest rates rise dramatically, Iyár wage rates also rose, and the client is locked in a lease rental payment to find himself, you can not pay. Traditional scholars of Islam have made this a key reason for price determination is a fundamental requirement of any sales contract. (How can I make you want to buy something if I do not know the price?) In addition, the client can decide if that does not pay rent, Al Ahli to the contract originally provided by the bank to repay the amount of funding must be guaranteed. cases to sell the house to achieve this goal, there is an option to download the meantime, housing prices, sales repay the amount financed can be enough to start. In this case, the customer is obliged to make up any deficit, banking, and "equality" has a great negative perspective, client ... This attitude of client debts owed more than their house is worth.

Moreover, conceptually, should be a clear customer may rent only, if not its own.However, Al Ahli is the product really is a rental, why take the risk that customers will need to fall in real estate? On the other hand, if the customer bears the risk, because the owner of the property, then why pay rent to your bank? Perhaps that is the case, the customer and the organization of their own land, but the contract with Al Ahli is clear that the bank account of the whole house, on the last payment to the owner of the client, and only then the title will be transferred to the client. In fact, the core of the Islamic sale and lease were mixed, so no more about the integrity of the name. such as, What would happen if a mixture of risk should be evident from consideration of the Islamic lender is allowed Hiba (gift) to Qardu (interest-free loans), and three that Islam is a promise of access to an acceptable agreement. client money lenders' If you can not ask donors to give gift money to the interest-free loan, which will return for the promise. It would be a clear case of interest, but the tender documents should not have the word "interest" to mention.

The third model of housing finance available to UK model of cooperation must be refused. This model and judge from Canada, the Islamic Co-operative Housing Corporation Limited demonstrated over many years, and recently into Manchester in Great Britain Ansar Ansar Housing Finance Ltd. Here prequalification period required by each client is entitled to buy shares in organized housing finance, housing finance to the later to achieve. obtained in this way within the organization's funds are used to finance other clients who successfully complete the prequalification period.When the client has the right to housing finance, people (housing finance Organization) people who bought a house in B (home sellers) from the name. Person C (the customer), an association of people and a nominal vehicle, this is considered personal property becomes a member ("nominal" co-operation of the vehicle due to appear in the title deeds to the land). To this end, the C shares, the value of collaboration with people of the prequalification the vehicle body, and the relative size of the person and the person transfers his shares in the ratio of C to determine the contributions of the co-operation. C people now living at home and pay rent on the vehicle. If you rent the vehicle's shareholders, and the course of their work is distributed among C. Over time, people buy shares in the vehicle C people, and eventually come to own them all. at this stage, the full nominal owner of the house, and, therefore, applies to rental property all together. The title is the last formal step in the transfer of assets offered to the customer's last payment in connection with the production of special (see next paragraph) between the person and person C.

The most common implementation of these partnership arrangements refused, and the amount of the rental contract for the purchase price per share (market value of each point in the future and not the connection) will be determined at the beginning.This model shares the purchase price of the purchase price of the property market value at the time was not well received by potential clients must be reflected at. most likely to know the customer property prices rise because the trend over time, and, therefore, is not interested in the price of their homes to increase their participation in the market value should be reflected in pay. disadvantage of this assay is that people invest in shares, many of those institutions to be able to save a backup of their homes. piece of property if the arrangement is thrown pieces, a few years ago prices were accepted fact, that real estate prices increased at the trend, the market value of these assets to be sold under the usually. This course is quite bad, and solutions to the commercial arrangements, depositors, in exchange for money that is financed.does the sale of the shares of each solution will be balanced and the market value of cost efficiency can be achieved as is. To this end, Ansar-financing products to some extent among members to share the profits or capital value of the house (pre-agreed ratio) to the loss, the nominal co-operation is finished. This is a special payment referred to above.

At present three main trade, UK Islamic mortgage market attention to the subject.Customers are concerned about the amount of the deposit, the bank is required before approval is met. HSBC New Islamic mortgage product soon to be launched in July 2003 in the United Kingdom as low as 10% (property), the client may request the backup, but Al Ahli murabahah Iyár program and now must save at least 20% from clients (17% or less reduced property values increase), and Ansar Finance refused co-operation scheme based on 20% deposit required to pre-selection period. The minimum deposit level is not competing creditors on the basis of interest, offering 100% mortgages, although Muslims, who remember the 1980 property boom at the end of the experience may see as a bad thing. On the other hand, Finance Minister Gordon Brown announced his last budget, after the double stamp duty problem (the bank paid the original seller from the buyer as a buyer and you as a customer by the Bank) is set to be neutralized. To achieve this goal, the home sale transactions that occur murabahah, for example, will probably come to surgery according to principles of Islamic finance as part of an agreement and is not seen nothing like the two sales.Thirdly, the fear of bankers in Basel capital adequacy rules, capital assets and intellectual property of a greater weight than other loans secured by real estate mortgages is provided. banks to offer mortgage loans for its venture capital interests and Islamic mortgages, which increased its lead to cost more than usual on the opposite side to the Islamic mortgage demand.

broad economic terms, promoting Islamic mortgages, interest in the domain of risk was not limited by a series. Not least among these is the Muslim bank and building society loans from Earnest disease starts when prices hit about the same as the strength of their community to other communities throughout the UK. For example, the Highfields area of Leicester, £ 60,000 to buy a standard triple-terrace house since the beginning of 2000, when the Muslims have found a similar property now costs £ 120,000 or more to buy that. Most of the Muslims, but recently the opportunity to buy a house in Highfields on loan from the bank, but the state never had to house buyers has started to get a bank loan in the first place if it will be. Those who sell and move elsewhere to take advantage of house price inflation, Highfields, but the Muslim community, which leads to more debt, into a house to live in the same move.

Although banks and building societies as a whole and the individual banks to make money from the funds the individual level, one building society loan interest rate by a higher rate and then we will. At the same time, most Islamic mortgage lenders benefit from the money invested in the beginning of a financial fix. What is the absolute level of recognition achieved (for example, 70% of the customer "win" the bank also murabahah), or the interest rate on bank loans (for example, the customer pays the same rental rate for London interbank offered rate as the upper part of the spread, Libor plus 1% per annum bank). Generally, only the bank transaction £ x, knows that is a contract and receive CZK X plus something extra later if their customers. My guess is Al Ahli to borrow money for a year Libor London interbank money market to finance his regime Iyár. Each year, the Al Ahli renew their loans to money market next year and that is why rental rate for each year of his contract Iyár Libor plus a margin equal to the amount referred to confirm the upgrade. This is Al Ahli and Al Ahli margin Iyár won agreement to ensure the very beginning of this range. If UK interest rates rise significantly in the future, perhaps the weakness of Sterling on the currency markets as a result, customers often find themselves in the Iyár problems. repossession orders were then converted to common, if perhaps less interest in Islamic mortgages can be seen in the health of domestic financial opportunities than threats.

Islamic mortgage market is large enough to make a niche for-profit organizations that are paid early, but the pace of development may be delayed more credit than the lethargy in the main body positions so that the Muslim community. reject market-based model of cooperation to promote the value I remember in 1995, Muslim housing association in London, the only director proud of its presentation to the end "we do not need to announce to the Islamic finance. We have a new five-year fixed rate loan, Barclays Bank agreed to thanks to Allah." has been "Thanks to Allah" a piece made me really depressed.

For some, the Bank of England has asked a committee to organize work on Islamic mortgages for stealing a local request is to install security alarms. For others, the mortgage interest, to pay the price of non-Muslims living in countries. What seems clear at this time there is a lot of Islamic mortgage products, cash flows and the risk of creating the initial conditions are similar to their traditional counterparts. Muslim community has ignored this fact at their peril. Antithesis is true freedom in mind interest debt, and debtor countries as a man of many creditors and the debtor is subject to your treasurer. high mortgage people who have tended to undermine the principle of the main points. Similarly, the growth of Islamic culture, a mortgage assimilation of Muslims into wider British society is a powerful force. this strategy we are now?

Islam is a political fact that removing the last serious challenge to the institutions of modern usury. Issues of Islamic finance in the world today a decision whether or not his work, success can be specified in the next few years. the worst case, only the failure of Islamic finance that will be the usual practice of usury is a form of organization to another might mean.

Non-fee Rate

Not so long ago, American commentators talk about U.S. government debt redemption and a British minister has been spreading the "end of boom and bust."Now, Americans are increasingly involved in the day about ballooning budget deficit and the British in the middle of another unsustainable housing bubble.

The explanation for this economic cycle is relentless in its commercial banking practices that began hundreds of years ago. After its founding in 1694, the Bank of England printing on bits of paper that carried the promise of the holder of gold coin repayable on demand. Coin bank depositors, this one piece of paper as proof of their deposit. Any individual with a paper for the banks would then return the underlying gold every weekday. With his reputation is an instrument of government, people went to a bank trust paper receipts England.


Quickly began to use not only as receipts for money deposited in the bank, but as money itself. At this point the bank can print large quantities of paper money at almost no cost and lending at interest. Big profits, as it would for any person who acquires a "license to print money." Banka charters soon became very popular things. The government and people learn quickly, deeply in debt banks.

Today's modern money created from nothing into the banking system in a more sophisticated way, but the principles are the same and the most fundamental flaw in the remains. When banks create money, not enough to interest on the loan, that money primarily to repay. For example, if the banking system a total of 100 creëert today and borrows at 10% annual interest, then 110 will be returned to the borrowers of next year.


But where the other 10 come from? The answer, in the modern banking system is that the repayment of bank loans, the interest on them will require new sums of money to be made. This is a big problem, because in all developed countries today, most of the banking system creates new money. As banks create new money by lending in life, debt, and therefore the results of the cycle continues. More and more money in circulation, leading to higher and higher prices, and a pile of debt that never seems to shrink.

When the banking system is more money than is needed for the production of past debts, the company has a tree. General government tax revenue and increase the state budget is in surplus. Asset prices start to rise, commentators herald a "new economy", and politicians deserve recognition for their superb management. But when the banks are nervous about the lenders or the company is growing nervous about lending, and so at the right time to begin to slow bank lending. Early existing borrowers are finding they do not have enough money to pay its old debts. Business conditions deteriorate, government tax revenues are declining and the state budget goes into deficit. At this stage of the process, everyone will realize how foolish it was once the "new economy" story believed.

During the first years of the Bank of England, the limiting factor in the Bank's money, was the possibility that people would go to the bank to connect with paper receipts and ask banky promise to pay gold in exchange are met. So banks carefully calculated how much revenue would be presented to the bank on average each day for redemption in gold, and how much gold would be deposited in the bank every day in exchange for paper receipts. The calculation was crucial because it determines the ratio of reserves to be held against the persistent problem of the paper. The amount of the reserve ratio, of course, less than 100%. For example, with 100 pounds for their own gold coins in the safe and 50% reserve, the bank was able to create and issue up to 200 in the amount of paper receipts of interest on the loan. If the bank decides that the minimum reserve of 25% would be found safe, with 100 pounds in gold coins in the vault, less than 400 in the amount of paper receipts can be created for a loan at interest.

Of course, it was in the interest of commercial banks to lower fixed reserve ratio. A low ratio, however, and the bank may take the gold coins are not able to respond to requests for redemption of paper notes to meet. This could be the cause of great misfortune, because the bank will be forced to close the door and withstand any catastrophic loss of confidence in its activities. Well, that principle had been established at this time, the lower the reserve ratio, the higher the risk, but greater profit can be made. This principle will remain with us today in all the 'good' books that the financial relationship between risk and reward to preach. It is entirely artificial rule, which builds on the work of the early bankers.

If people could be encouraged to use paper bankers' money in their everyday lives, instead bank on the base to collect gold coins, then there would be fewer requests for redemption at the counter. The bank would accept a lower reserve ratio and produce more paper receipts for each unit of gold currency reserves. Money Bank is now made using these tools to check and book collections, and the state does not provide any gold coins, but notes on paper. But now people are encouraged to bank-created money, not government-created money to be used in their implementation. The strategic reason for the promotion of commercial banks' bank for credit, it is clear if we take into account the importance of their perspective, reducing the reserve.

Long results allow the monetary system could be developed included: If the American people ever allow banks to issue their currency, first by inflation then deflation control, banks and corporations that grow up around them, deprive the people of all property until their children wake up homeless on the continent their fathers occupied. Issuing a lot of money, should be taken from banks and restored to Congress and the people to whom they belong. I sincerely believe that banking institutions are more dangerous than standing armies. Thomas Jefferson, Jefferson Writings, Vol. 7, "Autobiography, letters, reports, messages, addresses and other writings," a committee of Congress, Washington DC, 1861, p. 685

Several measures are now in the bank executives to describe the relations major reserve. One such is the proportion that the amount of capital against risk-weighted assets "of a bank. It provides a measure of how much loss in value of the assets of the Bank's own resources in support of that position, where liabilities exceed assets of the depositors of banks. The greater the capital the more comfortable cushion for the bank. 


To ensure risk-weighted value for each of its assets for production, the bank's management to assess the risk that the assets in accordance with prescribed guidelines. For example, short-term U.S. dollar bill is assumed that no risk becauseThe U.S. government has never assumed it does not meet its own currency obligations. The money would also be a zero-risk weighting. Meanwhile, one obtains a mortgage loan at 50% weighting. Therefore, if the bank has 200 of assets, consisting of 100 100 in cash and property loans mortgage, then the risk-weighted assets in this simple example, 50th in total so if our hypothetical bank wants 10% of capital adequacy to resist the risk-weighted assets must be at least 5 of its own funds as equity to maintain a bank balance of the price.

Principles established in 1988 Basle Capital Accord in principle with the above methods, proposing a minimum Tier 1 capital ratio of 4% of risk weighted assets and a minimum total capital of 8% of risk-weighted assets. Tier 1 capital consists of net book value of equity and retained earnings of the Bank as a "Tier 2" capital includes loan loss reserves and subordinated debt. The total capital is approximately equal to the sum of Tier 1 and Tier 2 capital. It should be clear that the total capital ratio is higher than the Tier 1 capital ratios. For example, on December 31, 1997 the HSBC Group's total assets were £ 286 391 million Tier 1 capital was £ 16,564 million (total equity shown on the balance sheet were £ 16,442 million) and Tier 2 capital was £ 9,772,000. After the risk weighting of assets, HSBC's Tier 1 capital was 9.3% and total capital ratio was 14.2%. (In June 1999 the Basel Committee on Banking Supervision proposed a new framework for capital adequacy for internationally active banks, often referred to as "Basel 2" guidelines aimed at ensuring more consistent with modern banking practices.)

The ratio is very different than the relationship liqudity. Liquidity indicators measure the amount of funds on deposit liabilities. The higher the liquidity ratio, the less likely it is that bank depositors of refund requests due to property must be liquidated fast enough. In other words, liquidity problems, which related to cases where a bank has insufficient assets to savers honor requests for withdrawal, but if the bank has assets in bad shape (real estate instead of cash, for example).

As with capital ratios, there are different types of liquidity ratio. For example, the broad liquidity ratio of cash and short-term securities on deposit liabilities. There is also a smaller degree of liquidity and cash reserve ratio, in which the proportion of cash in bank interventions in relation to the deposit liabilities. Of course money is already in the form of gold coins and deposits of commercial banks have already issued in the form of paper bills. Instead, the cash reserve ratio compares the state's population made money (the monetary base or "M0", as it's called) held by banks against the value of customer deposits. Commercial banks are usually subject to a minimum level of cash reserves controlled by the Central Bank or other competent authority.

In Great Britain, the cash reserve ratio decreased over time, and history was repeated decrease to some extent in other developed countries. Since 1971, the cash reserve ratio of 10% applies to the bank and this setting must also have at least 1.5% of the value of "eligible debt" to hold (as defined part of total deposits) with the Bank of England in non-interest-bearing account. Bank of England to invest balances in these accounts to a non-interest bearing money at interest, and thus generate profits to finance their own activities.

In 1981 the situation changed. Under the new monetary arrangements, commercial banks were required to 0.5% of eligible debt to the Bank of England in a non-interest bearing accounts maintained, and an average of 6% of their eligible liabilities to maintain liquid reserves in the form of short-term money market instruments. At a time when the Bank of England Act was passed in June 1998 was a non-interest bearing balance ratio was reduced to 0.15% (intermediate stage in 1986: 0.45% 1991 0.4% 1992: 0.35% in April 1998: 0.25%) and the requirement of a minimum liquidity reserve was completely abolished.

We should note the difference between legal or required cash reserve ratio (which is imposed by the Government and / or central bank), and free cash reserve ratio for banks themselves to choose to hold. 31 December 1997, the HSBC Group is held the balance of the monetary base +1.798 million pound commitment to customers against a million pound +81.960 deposits and other liabilities to customers to deliver a "pay term deposits of three months or less at 000 pounds 85 172 1000. This means that the HSBC Group opted for something smaller than the cash reserves of about 2.2% overnight, and less than 1.1% of the cash reserve account and deposit accounts.

The above ratios are the same size, which is the entire British economy. Bank of England figures for 1997 show that the British government of £ 27.80 billion of government money, while commercial banking system was created and lent to 721.16 billion pounds (this is the "M4" definition of money supply) produced. On this basis, the actual average cash reserve ratio for the banking sector in the United Kingdom was 3.8%.

According to Article 19.1 of the Statute of the European System of Central Banks (ESCB), the European Central Bank (ECB) in October 1998 ruled that the commercial banks operating in the euro area would be necessary for the ECB reserve of 2% of their deposits. Unlike the United Kingdom, but these reserves would pay interest (at near market rates), thereby competing with lower (but non-remunerated) reserve requirements in other jurisdictions.

Reduction of the required reserve is frequently quoted in the quietest of the fashion for these important changes. Sequential decline in the ratio, the theoretical limit on the amount of money that the bankers can create is relaxed. It is therefore not surprising that after the release of any required reserves, the share of bank money-making time and increasing trend of rapid economic bubble. But this is clearly only one side of the story, because even though they are not covered by the reserve, the amount of state money to raise the ceiling on total bank money in circulation increases.

A hike in bank funds and money to help both en geleidelijke roughly related to the prevailing level of interest rates and real economic growth, it is possible that such a course of events is consistent with economic stability for many years. This is a rare scenario of course (which country has the boom and bust cycle experienced in the last twenty years?) And that nothing remains the same for unrepayability debt, all political and commercial pressures that will cause the Company.

                                            1968        1978        1988       1998 
United States                   12.3         10.1           8.5          10.3 
United Kingdom              20.5         15.9           5.0           3.1 
Germany                          19.0          19.3         17.2         11.9 
Turkey                              58.3          62.7         30.8        18.0 * 


* Data from 1997 Source: IMF Financial Statistics Yearbook 1998 and 2001

% Ratio of M0 to M2 (IMF definition) country 

I think that the general trend to lower actual and desired cash reserve ratio will remain as it is in the interest of commercial banks that can do it. At the end of this road is one of the main objectives for the international banking lobby, which is to create a cashless society, where the use of bank created money, the only option. The state created the money would no longer relevant to the business of banking. Such a system would be a disaster for any nation, because the opportunity for interest-free money would be lost and provide a major breakthrough occurred in the setting of interest rates on the money that banks should be removed. 

When it comes, will probably move innocent dressed in the appropriate language, something to do with "the need to increase efficiency, or the end of" old-fashioned pieces of paper "I was expecting. The result is placing even greater financial strength in the lap of banks (and credit rating agencies) and a digital record of every financial transaction by each person. What a nightmare.

One of the clearest signs of this process is contained in Article 104 of the Maastricht Treaty. In his speech on 13 May 1997 in the Oesterreichische Nationalbank in Vienna, Alexandre Lamfalussy, president of the European Monetary Institute is as follows: "Since the beginning of the second phase [EMU], Member States may no longer participate in the financing of budget deficits (Article 104) accordingly. For the third phase, it is expressly forbidden ESCB [European System of Central Banks] to provide credit facilities to ensure that public administration or government debt securities for purchase on the primary market. In addition, financial institutions are prohibited from lending to the government on preferential terms (Article 104a). In addition, bail-out of the state, with financial problems by other countries, is completely eliminated (§ 104). Finally, the Treaty requires the EU single currency in order to avoid excessive budgetary deficits, avoidance (Article 104 C). Compliance This requirement will be treated as part of a comprehensive procedure which will ultimately lead to imposition of sanctions if no effective action was taken in excessive deficit. preventive nature and effectiveness of this procedure has recently been strengthened by the Stability and Growth Pact, which sets out how the date for the steps in the procedure and scope of the sanctions. It also provides that every targeted the budget close to balance or in surplus over the medium term. "

This means that the governments of the European Monetary Union can no longer raise their own interest-free money. Instead, the only permitted commercial banks to create money from nothing, then the money that governments have to pay interest for the privilege of borrowing (Article 104a). The speaker recognizes that the state may be too much of the banking system, so that inflation and higher interest rates and steady economic boom to borrow. Article 104 C and subsequent "Stability and Growth Pact" between Member States, see this issue. Article 104 is self-explanatory.We are constantly informed commentators in the media that the government Wreckless entrused the monetary printing press, but this argument completely ignores the possibility of commercial banks to create money for their own profits. It also ignores the fact that commercial banks can do Wreckless here.

The obligation of Member States on a balanced budget in the long term goal is a fundamental error in the current monetary policy system. Balanced budget has never been in modern European history, it is impossible, because the mere fact that the debt created by the banking system total unrepayable. The requirement for a balanced budget will be so easily forgotten or be dogmatic attempt to hold on to the major political or economic unrest will follow.

Theory of Money, which is related mainly been supported by many people over the centuries from fractional reserve banking began. Predicts monetary events that happened, explains how they occur and why they occur. This theory also explains why the debt, and money supply is growing in every developed economy, and why, no matter how hard we try otherwise, the debts of the company only seems to grow. The theory is basically sound easy to understand, easy to prove, and often very intuitive.Professional economists may sneer, but still produced a similar alternative.

Bankers are now presented as an ("We can only borrow money from other people"), when in fact they are the creators of money out of nothing. They are doing their best to their critics, who largely successful strategy is to ignore and systematically promote their views through schools, universities and media. U.S. Federal Reserve is spending millions to promote sound economic research each year. Bank of England as well. And since 1997, the HSBC Group's report: "HSBC Money Gallery at the British Museum attracted millions of visitors after the inauguration in 1997, resource pack for teachers" was designed to help history and teach students the value of money. And facilitate distance learning for those who do not go to the gallery, CD-ROMs in the world of money, will be released in June 1998 to visit the book, Money. history, will soon be available in Korean, Japanese, French and German, and a children's book, a story about money, was published in paperback in Danish. "
Propagandize what you want, men Money Power. Any form of oppression is over.