Banking like electricity: One cannot do without it

Czech Deputy Governor Mojmír Hampl, on what he called the trilemma of the banking sector:

What worries me is that over time many end-users (and also policy-makers) tend to look at standard commercial banks as utilities with all their typical features. One of those features is that the population is becoming more and more incrementally dependent on the services such utilities provide, quite often without the very same population even noticing it.

All this is happening on-line in small steps, incrementally, and all this means banks might in bad times be seen as utilities, much less resolvable due to the complex services they provide, than in the past. And the complexity of the services of a utility is sometimes visible only very shortly before its potential collapse. So “utilities” providing products with incrementally increasing dependence will be able to exit the market in a much more complicated way, if at all. The same applies to the financial sector, all the more so if we go down the road to a less-cash economy...

Winding down a highly-networked bank-utility in tough times is indeed going to be a real test of policymakers' resolve to resolve such an institution if and when such need arises.