[DRAFT] NEW PROPOSAL REGULATION FINANCIAL SYSTEM
Posted: Wed Jan 25, 2017 3:51 am
NEW PROPOSAL
Regulation of the Financial Sector
Category: Social Justice
Strength: Significant
Observing: the importance of regulation of the financial sector (banks and insurance companies) in member states,
Cognizant: of the risks associated an unregulated financial system in the member states,
Honouring: The possibility to regulate the financial system by the member states itself and remains sovereign on this matter.
A. Recognizes: member nations' right to develop their own method how to regulate the financial system,
B. Forbids member nations to deregulate the financial system that could cause major risks for the world economy and could destroy the financial system. If the member nations (especially for socialistic and state industry states) want to opt-out this resolution it is possible by putting own laws in effect to regulate the financial system.
C. Directs a World Assembly Stability Mechanism (WASM) to grant the safety of the financial system by the following measures:
1. The WASM will audit the financial sector of the member states;
2. The WASM will test the banks and insurance companies if they are solvent enough;
3. The WASM will do stress tests to ensure if the economy is failing the banking system is liquid and solvent enough to overcome the trouble.
D. Tasks: the WASM with securing and safeguard the financial system and to eliminate the possibilities of a bank run that could cause major problems in the trust between banks and the people.
E. Further tasks: The WASM will do research reports and will contribute to the safety of the financial sector.
F. Directives:
1. The amount of debt is restricted. Consumers can’t lend more money then 4 times there total salary a year;
2. The banks need to have 12% of their equity in cash to remain liquid if it comes to a run on the bank. If a bank fails to achieve this it could lend from the central bank;
3. Insurance companies and banks needed to have a license that they may sell their financial products;
4. Employees in the financial sector need special certificates about the financial products;
5. Insurance companies need a solvency rate of 150% or more to overcome major risks on insurance products. (This means the insurance company can pay 1,5 times their liabilities on a normal level without an enormous raise of claims caused by weather, fire or other circumstances);
6. Customers need to be well informed by the banks and insurance companies. This will solve problems that the banks and insurance companies sell products that are not in the interest of the customer.
OLD PROPOSAL
Regulation of the Financial Sector
Category: Social Justice
Strength: Significant
Observing: the importance of regulation of the financial sector (banks and insurance companies) in member states,
Cognizant: of the risks associated an unregulated financial system in the member states,
Honouring: The possibility to regulate the financial system by the member states itself and remains sovereign on this matter.
A. Defines, for the purpose of this resolution:
• Financial sector: the banks and insurance companies
• Debt crisis: To overcome future crisis that cause major risks for the financial system and the future of the economy that could cause a depression and a worldwide economic crisis.
• Trust: The financial sector is there to provide services to the people and needs to be trustworthy. The money of the people needs to be save.
B. Recognizes: member nations' right to develop their own method how to regulate the financial system,
C. Forbids member nations to deregulate the financial system that could cause major risks for the world economy and could destroy the financial system.
D. Directs a World Assembly Stability Mechanism (WASM) to grant the safety of the financial system by the following measures:
1. The WASM will audit the financial sector of the member states;
2. The WASM will test the banks and insurance companies if they are solvent enough;
3. The WASM will do stress tests to ensure if the economy is failing the banking system is liquid and solvent enough to overcome the trouble.
E. Tasks: the WASM with securing and safeguard the financial system and to eliminate the possibilities of a bank run that could cause major problems in the trust between banks and the people.
F. Further tasks: The WASM will do research reports and will contribute to the safety of the financial sector.
G. Directives:
1. The inter-banking lending rate is controlled by the central banks;
2. The amount of debt is restricted. Consumers can’t lend more money then 4 times there total salary a year;
3. The banks need to have 12% of their equity in the currency of the country where the bank is located. This could overcome problems if some of the investments are decreasing in value rapidly.
4. Insurance companies and banks needed to have a license that they may sell their financial products.
5. Employees in the financial sector need special certificates about the financial products.
6. Insurance companies need a solvency rate of 150% or more to overcome major risks on insurance products.
7. The people needs to be well informed by the banks and insurance companies. This will solve the problem that insurance companies and banks will only sell products to make profit without informing the customer about the risks.
This resolution will make the financial sector more stable and.
Regulation of the Financial Sector
Category: Social Justice
Strength: Significant
Observing: the importance of regulation of the financial sector (banks and insurance companies) in member states,
Cognizant: of the risks associated an unregulated financial system in the member states,
Honouring: The possibility to regulate the financial system by the member states itself and remains sovereign on this matter.
A. Recognizes: member nations' right to develop their own method how to regulate the financial system,
B. Forbids member nations to deregulate the financial system that could cause major risks for the world economy and could destroy the financial system. If the member nations (especially for socialistic and state industry states) want to opt-out this resolution it is possible by putting own laws in effect to regulate the financial system.
C. Directs a World Assembly Stability Mechanism (WASM) to grant the safety of the financial system by the following measures:
1. The WASM will audit the financial sector of the member states;
2. The WASM will test the banks and insurance companies if they are solvent enough;
3. The WASM will do stress tests to ensure if the economy is failing the banking system is liquid and solvent enough to overcome the trouble.
D. Tasks: the WASM with securing and safeguard the financial system and to eliminate the possibilities of a bank run that could cause major problems in the trust between banks and the people.
E. Further tasks: The WASM will do research reports and will contribute to the safety of the financial sector.
F. Directives:
1. The amount of debt is restricted. Consumers can’t lend more money then 4 times there total salary a year;
2. The banks need to have 12% of their equity in cash to remain liquid if it comes to a run on the bank. If a bank fails to achieve this it could lend from the central bank;
3. Insurance companies and banks needed to have a license that they may sell their financial products;
4. Employees in the financial sector need special certificates about the financial products;
5. Insurance companies need a solvency rate of 150% or more to overcome major risks on insurance products. (This means the insurance company can pay 1,5 times their liabilities on a normal level without an enormous raise of claims caused by weather, fire or other circumstances);
6. Customers need to be well informed by the banks and insurance companies. This will solve problems that the banks and insurance companies sell products that are not in the interest of the customer.
OLD PROPOSAL
Regulation of the Financial Sector
Category: Social Justice
Strength: Significant
Observing: the importance of regulation of the financial sector (banks and insurance companies) in member states,
Cognizant: of the risks associated an unregulated financial system in the member states,
Honouring: The possibility to regulate the financial system by the member states itself and remains sovereign on this matter.
A. Defines, for the purpose of this resolution:
• Financial sector: the banks and insurance companies
• Debt crisis: To overcome future crisis that cause major risks for the financial system and the future of the economy that could cause a depression and a worldwide economic crisis.
• Trust: The financial sector is there to provide services to the people and needs to be trustworthy. The money of the people needs to be save.
B. Recognizes: member nations' right to develop their own method how to regulate the financial system,
C. Forbids member nations to deregulate the financial system that could cause major risks for the world economy and could destroy the financial system.
D. Directs a World Assembly Stability Mechanism (WASM) to grant the safety of the financial system by the following measures:
1. The WASM will audit the financial sector of the member states;
2. The WASM will test the banks and insurance companies if they are solvent enough;
3. The WASM will do stress tests to ensure if the economy is failing the banking system is liquid and solvent enough to overcome the trouble.
E. Tasks: the WASM with securing and safeguard the financial system and to eliminate the possibilities of a bank run that could cause major problems in the trust between banks and the people.
F. Further tasks: The WASM will do research reports and will contribute to the safety of the financial sector.
G. Directives:
1. The inter-banking lending rate is controlled by the central banks;
2. The amount of debt is restricted. Consumers can’t lend more money then 4 times there total salary a year;
3. The banks need to have 12% of their equity in the currency of the country where the bank is located. This could overcome problems if some of the investments are decreasing in value rapidly.
4. Insurance companies and banks needed to have a license that they may sell their financial products.
5. Employees in the financial sector need special certificates about the financial products.
6. Insurance companies need a solvency rate of 150% or more to overcome major risks on insurance products.
7. The people needs to be well informed by the banks and insurance companies. This will solve the problem that insurance companies and banks will only sell products to make profit without informing the customer about the risks.
This resolution will make the financial sector more stable and.