Banking demands strong oversight

THE EDITOR: Banking is a critical sector that demands robust interconnection and strong regulatory oversight. Systems like LINX (local interbank network) and ACH (automated clearing house) facilitate seamless and secure digital transactions, essential for maintaining financial stability and public confidence.

Ensuring these systems are interconnected enables faster, more reliable payments, supports economic activity, and reduces operational risks.

However, this interconnectedness must go hand-in-hand with prudent regulation. Countries that have experienced banking collapses often did so because depositors’ funds were inadequately protected and oversight was weak.

Protecting depositors’ savings through deposit insurance schemes, strict licensing, and ongoing monitoring is vital to prevent crises and maintain trust in the financial system.

While deregulation can foster innovation and competitiveness, over-deregulation – especially in banking – can jeopardise financial stability. Therefore, a balanced approach is essential.

Increased interconnection and technological modernisation should be complemented by stringent oversight, clear legal frameworks, and effective consumer protections.

In conclusion, maintaining and strengthening banking regulation while advancing interconnected payment systems is key to a resilient financial sector that safeguards depositors and supports sustainable economic growth.

Restoring trust and stability must be the primary goal in reforming this vital industry.

GORDON LAUGHLIN

via e-mail