Why is the privatization of banks happening everywhere?

Why is the Privatization of Banks Happening Everywhere

Answering the Issues of Bank Turn-over

From Government to Private Administration

Introduction

Banks are directly connected with overall economic conditions . So they reflect the health of the economy and the direction it is taking . All indicators show that the world 's economies , especially those of the Western world and Japan , are in a very serious state . Never have so many countries had such economic difficulties at the same time . French president Valyry Giscard d 'Estaing summed up the feelings of many . He

warned that the world was in the grip of a general economic crisis and that all the curves are leading us to catastrophe (Bonin , 2003 , 31 Country after country has been hit with rampant inflation , money shortages , declining real income of workers , persistent unemployment and poverty (Bonin , 2003 , 21 . The seeds for this condition were sown decades ago . But the situation was made much worse by the recent fourfold rise in oil prices . Now nearly every oil-importing nation has been going deeply into debt to try to pay its staggering oil bills Thus , after several European banks closed and others , including a Swiss bank , suffered sharp losses , The Wall Street Journal said : The system is sick ' It added

Not even the highly vaunted Swiss banking system is immune . So is anything really safe today (Berger , 2000 , 13

There never has been a time when so many imponderables hung over markets and over those elements which control actions of markets (Bonin , 1998 , 14

When even the biggest Swiss bank is clipped in a foreign exchange deal , then one might well ask : What 's the world coming to ? Pessimists already are answering the question (Berger , 2000 , 41

History of Banking and the System 's Failure

THE phrase as good as money in the bank ' once meant that the investment or possession was considered to be very safe . This comparison was made because banks were regarded as very safe places to put money (Drakos , 2002 , 14 . But times have changed . Today many people are not so sure about the safety of the money they have in banks . And there is good reason to feel that way . The financial experts are not so sure either (Fries , 2003 , 17

The Wall Street Journal declared in a headline : Fears About Stability of the Banking System in West Are Spreading ' It noted that many banks in the Western industrial nations are in trouble . Their financial position has deteriorated . An increasing number of economists feel that the banks are in worse shape now than at any time since the Great Depression that began in 1929 ( Bonin , 2003 , 16 .Recent bank failures have been a shock . In October 1974 the Franklin National Bank in New York was declared insolvent . It had been the nation 's twentieth-largest bank , the largest to collapse in the history of the United States Several others closed during the year . In Germany four banks failed including the largest private bank , I . D . Herstatt . Some other...