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Old 10-18-2011, 05:52 AM   #1
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Lightbulb Sprott to open a bank without fractional reserve lending

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Mr. Sprott and the asset management firm he founded, Sprott Inc. (SII-T6.97----%), are investing in an Ontario-based currency trading company known as Continental Currency Exchange Corp. They, along with the current management of Continental, are applying to federal regulators for permission to turn the 17-branch operation into the Continental Bank of Canada. They expect to get a decision early next year.

The bank Mr. Sprott and his partners envisage would seek to address all the things that Mr. Sprott has warned against in the global financial system, such as too much leverage and a lack of confidence in paper currency.

Continental Bank would take deposits, but it would make no loans, unlike most current banks that are built on a model of lending out far more money than they actually have on hand.

Taking it a step further, customers who don’t trust government-issued currency may some day be able to keep their deposits in the form of gold and other precious metals that they could tap for everyday purchases. That idea is in keeping with Mr. Sprott’s musings about chequing accounts backed by precious metals – customers could deposit gold, then make purchases by cheque and have their accounts debited accordingly.

“Our firm, Sprott Inc., and Eric have taken a very committed view that the financial system requires a substantial reset,” Sprott Inc. chief executive officer Peter Grosskopf said in an interview. Given that, “Eric has always thought that offering consumers access to an unlevered bank is a good idea,” he said.

In a levered financial system, relatively small losses by banks on their loans and investments can push a bank close to collapse. This bank would have no leverage and instead would make money thanks to profit margins on services such as selling foreign exchange and precious metals.

“It’s the old commerce model of providing service instead of credit,” said Scott Penfound, vice-president of operations at Continental Currency.
...
http://www.theglobeandmail.com/globe...rticle2204088/

Look out Smith Barney! There's going to be a new "make money the old fashioned way - earn it" king of the hill.
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Old 10-18-2011, 07:46 AM   #2
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Interesting.
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Old 10-22-2011, 09:38 AM   #3
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So, what's the appeal of a bank such as Sprott proposes? Avoiding this:
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Footnote posted a day later on 21st - there isn't much that suprises me these days, but I have received some news from a subscriber, Bob, in the US, that has left me dumbfounded, and disappointed I must say as I was looking forward to being responsible for causing a run on the banks. Here is what he told me -

"Clive, in your post "If Europe Should Fail" you have recommended your subscribers "draw out a stash of cash". I have been attempting to do this with my local bank for over a week and this is what I have learned. The only "cash" the banks have at their facilities is the bare minimum for making change, cashing paychecks, etc. More than 99% of their so called cash "assets" is electronic money and not "cash" money. They are generally happy to transfer this electronic money elsewhere but if you want the real thing, "cash", the bank will, in most cases, either deny your request or put you off for, in some instances, more than a week. Many of my contacts across the US are reporting having the same problems I am having getting any significant amount of cash out of their local banks."
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If Europe Should Fail
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Old 11-07-2011, 10:37 AM   #4
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In Canada, where the banking industry poses relatively little systemic risk, a different solution is now in play. Partnering with the asset management company founded by Toronto billionaire Eric Sprott, Continental Currency Exchange—the largest independently owned retailer of foreign exchange in Canada—is out to create a zero-risk option.

The Oshawa, Ont.–based company won’t discuss full details of its proposal while its application for a bank charter is still outstanding. But Continental executive Scott Penfound says the plan is to offer “an old-school commerce bank,” meaning one that focuses on making money from selling services rather than issuing credit. “We will not do any lending for some time, if not forever.”
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Canada’s banks are watching with interest. But “nobody is shaking in their boots,” says one spokesperson for a major financial institution. When asked if anyone was shaking over the introduction of direct banking years ago, this source replied: “No. Good point.”
More (good read): http://www.canadianbusiness.com/arti...brand-new-bank

lol @ last paragraph.
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Old 11-07-2011, 05:34 PM   #5
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Excellent, I've had pipe dreams of doing that myself, but in my case it is certainly just daydreaming.

Best of luck to him!
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Old 11-08-2011, 10:21 PM   #6
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Eric Sprott gave a 30 minute interview with James Turk and covered a lot of issues that are near and dear to the hearts of pm bugs everywhere. Watch it and I think you will appreciate his big picture view of the world (and motivation for starting the bank mentioned in the OP):

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