It is said that the term ‘bank’ comes from the Italian ‘banca’ meaning bench. This is back when we used banks as safe havens for storing multiple real assets, particularly gold. The shelves on which the gold was stored were referred to as ‘the bank’ or ‘banks’. Hence we now ‘bank’ our money and use ‘the bank’ for various financial transactions.
Nowadays, that term means a lot more than it did back then. The banking system is something very few people understand the complexities of, or have even had the need to make full use of all the different products and institutions that lie within it.
It isn’t what it once was.
Despite this, it remains as integral to daily life as it did when we relied on it to keep our hard earned gold safe. For many the ability to hold a bank account is akin to being able to exist in modern society.
There was a time when to exist outside of the banking system was something that was associated with your economic status, rather than your beliefs. Financial inclusion has long been at the top of the agenda for many governments around the world. To have a bank account is to be able to partake in daily economic life – pay your bills, travel to work, save, heat your home, feed your children – all made possible by the virtue of having access to a bank account.
Those who do not have a bank account are usually referred to as the ‘unbanked’. For a minority, it is a conscious decision not to have a bank account. But for the majority of those who are unbanked it is a circumstance of a difficult existence.
13 million people and 5.9 in the EU and US respectively do not have access to formal financial services. Efforts have been ongoing to reduce this number by putting systems in place that make banking more accessible for a wider selection of minority groups including refugees, prisoners, human trafficking victims, and so on.
And rightly so, money does give you freedom. So when you are unable to access it, your life and the options available to you are restricted. Nobody wants that for their fellow citizens.
You’re Wrong! You’re Debanked!
So what does it say when the banking system on one hand wants to support those who have had to flee their home country because of their political beliefs, and yet on the other hand they are prepared to debank a citizen of their own country because of?…oh yes, their political beliefs?
We are of course referring to Nigel Farage. Farage is a divisive character. It’s rare that he garners sympathy from the mainstream media and the wider political spectrum. But, that is exactly what is happening this week.
At the risk of repeating something you have already heard. Mr Farage has had his account with British-banking stalwart Coutts shut down. They originally said it was a funding issue. But a document accessed by Mr. Farage suggests it has a lot more to do with his opinions and political beliefs than it is to do with the amount of cash he held in the bank (of which there was enough to meet the criteria).
“The committee did not think continuing to bank NF was compatible with Coutts given his publicly-stated views that were at odds with our position as an inclusive organization,”
The move has somewhat backfired for Coutts. In an attempt to effectively render Mr. Farage null and void from anything associated with them, the story is now appearing in over 4.7 million search results on Google.
The move has also brought up a whole area of political debate which is long overdue – how much can one’s freedom of speech impact your freedom to exist as a normal citizen?
As Farage himself said on the BBC last night, “Is it reasonable that law abiding citizens can be de-banked and become non-people?”
The British Prime Minister, Rishi Sunak (definitely no fan of Farage’s) even tweeted:
“This is wrong. No one should be barred from using basic services for their political views. Free speech is the cornerstone of our democracy.”
The straw that broke…
Farage isn’t the only unpopular person to have found himself sat out in the cold from his bank. Others associated with Brexit and unpopular views to do with transgender rights have also been similarly treated.
But, worryingly, there is nothing about Coutts’ actions that appear to go against any rules. As FCA Chair Ashley Alder told the Treasury Select Committee:
“For banks as well as other commercial enterprises, it’s fundamentally up to them to choose who they do business with…I’m not aware of anything in the FCA rulebook that goes to the point around how banks judge their own attitude to reputational risk, if that’s what it comes down to.”
So there you have it. If your bank doesn’t like something you legally stand for, or you legally tweeted, or someone you’re legally associated with, or something you can legally belong to then they can shut down your bank account.
This is a very scary move indeed, and something anyone (regardless of beliefs or even social media use) should sit up and pay attention to. As Mr. Farage said himself,
“Without a bank account, you’ve effectively become a non-person. You don’t actually exist. It’s like the worst regimes of the mid-20th century, be they in Russia or Germany, you literally become a non-person…
“I’m beginning to think that perhaps life in the United Kingdom is now becoming completely unlivable because of the levels of prejudice against me,” he said.
It isn’t right that a commercial bank can legally decide to make someone feel like that, to render someone’s existence to a point that they feel like they are a ‘non-person’. But, it seemingly isn’t illegal to do so.
Buy gold, buy your own sovereignty
Usually, we talk about gold and the role it plays in a balanced portfolio. How it acts as financial insurance in times of inflation or global economic stress and so on.
But, cases such as Nigel Farage’s bring us back to the very original reason why people chose (and still choose) to hold gold: because it is theirs, and only theirs.
The rise of debanking points to one of the biggest arguments to own gold – once your money is held within the banking system then you have very little control or say over how you can use it.
The beauty of gold ownership is that it exists outside of a politically motivated banking system. A system that thinks more about its own image than it does about the security of your money and the ease at which you are allowed to use it.
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