The case for a less deposit-intensive banking model

Joseph Bitar ()
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Joseph Bitar: American University in Dubai - School of Business

Journal of Banking Regulation, 2025, vol. 26, issue 2, No 11, 279-287

Abstract: Abstract The current banking model is distorted by government subsidy to banks financing risk, in the form of explicit deposits guarantees and implicit bailout guarantees. Starting from the financing model of bank intermediation, we argue for a self-sufficient banking architecture based on the securitization model. We propose the “15/30–20/40” rule relying on a double equity and non-deposit debt/bonds cushion, making client deposits a safe asset that is able to perform its monetary functions without the need for government guarantees. Finally, we show how CBDC can contribute to the stability of the monetary and financial system.

Keywords: Financial regulation; Bank capital requirements; CBDC (search for similar items in EconPapers)
JEL-codes: E42 G21 G28 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41261-024-00260-z

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