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ARMENIA NEEDS TO NATIONALIZE BANKS
Naira Hayrumyan
Story from Lragir.am News:
http://www.lragir.am/engsrc/economy25625.html
Published: 11:45:30 - 29/03/2012
The fact that the world's current economic order is reviewed is proven
by the revolutionary protests in the most developed countries. Last
year was marked not only by the Arab revolutions which were attempts
to absorb these countries by the system but also by the movement
Occupy Wall Street which questioned the existing system.
More people in the world come to think that the global financial system
is a web in which people are caught like flies, and all the income
goes to "spiders". The banking system which has been steady for many
years is blamed for devouring 99% of profits of the world population.
In Armenia, banks are prospering like never before. The ratio
of bank assets to the GDP amounted to 54.1% which is 9.6% higher
year-over-year. The income of the banks in the fourth quarter of 2011
amounted to 8.7 billion drams (over 22.5 million dollars).
With the absence of growth of production, the growth of assets and
profits of bank means that each of us pays a significant portion of
their income to the banks which are empowered to accept our deposits
at an interest rate of 7-8% and lend us money at an interest rate
of 18-20%. It means that the banks are legally robbing 10-12% of the
potential revenues of the population.
In the world this difference is 1-2%. However, there is more traffic
there, and in absolute numbers, bank profits are more. But overall,
the banking interests of Armenia look simply draconian.
It is symptomatic that Armenia's government is doing everything to
keep the financial system stable. Moreover, addressing the Republican
congress, Serzh Sargsyan noted as an achievement: "We closed the
ways which were leading to the collapse of the banking system, while
everyone would remain under the ruins its ruins".
Is it so? Would the Armenian economy resist if the banking system
collapsed?
It is difficult to do without banks today but obviously non-commercial
financial organizations will replace the current system one day which
will fulfill the same functions but to ensure the financial blood
circulation later than to generate profit.
Such a system operated in the Soviet Union. Banks are national in Iran,
and, according to experts, this is one of the reasons why the West is
"angry" with Iran. It would not join the global financial network
and it affects the whole system. By the way, they tried to localize
and nationalize the banking systems in Syria and Libya too.
Armenia could also nationalize the banking system which slows down
economic development. This would increase return on deposits, and,
conversely, reduce interest on loan. This would lead to increased
investments and economic growth.
It is clear that the nationalization of banks would not be welcome
in the world. So, it will be possible to start with a law enabling
the state to have a share in each commercial bank and thus influence
its interest rates.
Otherwise, it turns out that the government is working to ensure the
welfare of the banks. Already half of the GDP is ensured through the
banks, leaving the interests there. With such tendencies, the banks
will soon replace the government.
Naira Hayrumyan
Story from Lragir.am News:
http://www.lragir.am/engsrc/economy25625.html
Published: 11:45:30 - 29/03/2012
The fact that the world's current economic order is reviewed is proven
by the revolutionary protests in the most developed countries. Last
year was marked not only by the Arab revolutions which were attempts
to absorb these countries by the system but also by the movement
Occupy Wall Street which questioned the existing system.
More people in the world come to think that the global financial system
is a web in which people are caught like flies, and all the income
goes to "spiders". The banking system which has been steady for many
years is blamed for devouring 99% of profits of the world population.
In Armenia, banks are prospering like never before. The ratio
of bank assets to the GDP amounted to 54.1% which is 9.6% higher
year-over-year. The income of the banks in the fourth quarter of 2011
amounted to 8.7 billion drams (over 22.5 million dollars).
With the absence of growth of production, the growth of assets and
profits of bank means that each of us pays a significant portion of
their income to the banks which are empowered to accept our deposits
at an interest rate of 7-8% and lend us money at an interest rate
of 18-20%. It means that the banks are legally robbing 10-12% of the
potential revenues of the population.
In the world this difference is 1-2%. However, there is more traffic
there, and in absolute numbers, bank profits are more. But overall,
the banking interests of Armenia look simply draconian.
It is symptomatic that Armenia's government is doing everything to
keep the financial system stable. Moreover, addressing the Republican
congress, Serzh Sargsyan noted as an achievement: "We closed the
ways which were leading to the collapse of the banking system, while
everyone would remain under the ruins its ruins".
Is it so? Would the Armenian economy resist if the banking system
collapsed?
It is difficult to do without banks today but obviously non-commercial
financial organizations will replace the current system one day which
will fulfill the same functions but to ensure the financial blood
circulation later than to generate profit.
Such a system operated in the Soviet Union. Banks are national in Iran,
and, according to experts, this is one of the reasons why the West is
"angry" with Iran. It would not join the global financial network
and it affects the whole system. By the way, they tried to localize
and nationalize the banking systems in Syria and Libya too.
Armenia could also nationalize the banking system which slows down
economic development. This would increase return on deposits, and,
conversely, reduce interest on loan. This would lead to increased
investments and economic growth.
It is clear that the nationalization of banks would not be welcome
in the world. So, it will be possible to start with a law enabling
the state to have a share in each commercial bank and thus influence
its interest rates.
Otherwise, it turns out that the government is working to ensure the
welfare of the banks. Already half of the GDP is ensured through the
banks, leaving the interests there. With such tendencies, the banks
will soon replace the government.