Automated Banking System

Solution
 
   Since the nation's monetary system needs to be secure and reliable, replacing the current banking system with a single and consolidated automated bank at the national level would resolve the various problems that have been plaguing the banking industry.

   A fully computerized banking system that utilizes conservative lending formulas would protect the system from overextending itself with bad loans. The automated system will only offer fixed rate loans which prevents the numerous risks associated with variable rate lending practices.

   An important advantage of an automated banking system without human interference is that it only offers lending based upon the actual amount of capital in its reserves. In the past, banks overextended themselves and lent more money than they actually had on hand. This is a serious issue and is the primary reason why over 450 banks failed during the 2008-2012 financial disaster. In contrast, the automated banking system will only offer loans based upon its actual capital in reserves, so there is no risk associated with a failure in this regard.

   For greater accessibility, all deposits in an automated banking system will always remain 100% in cash and never risked with unsecured debt. This alone would have prevented the Silicon Valley Bank failure in 2023.

   The automated banking system will also provide a "hands-free" approach towards managing interest rates of where the rates are adjusted automatically based upon the availability of reserves. In the past, the prime interest rate was manually adjusted by the Federal Reserve for managing inflation and other concerns that had a negative impact upon the economy if raised/lowered excessively (e.g., bubbles/crashes).

   Another advantage of having a consolidated automated banking system at the national level is that it provides greater stability by eliminating the risk of insolvency (e.g., never have to worry that a particular bank will fail since all banks are combined as a single entity). The automated system removes the need for the FDIC insurance program, which provides a false sense of security since the fund is woefully inadequate towards insuring all the deposits of the nation.

   Some may argue that the disadvantage of having a consolidated bank is that it eliminates the competition for better interest rates. However, banks don't offer that much of a variation since their rates are based upon the prime interest rate. The minor benefit of having multiple banks compete against each other for slightly better interest rates isn't worth the risk of a bank (or multiple banks) failing due to an economic crisis. Also, an automated banking system at the federal level is non-profit, which will provide efficient rates for all.

   Having a solitary automated bank will also allow bankruptcy rules to improve such that a filing will become an extended grace period rather than the actual forgiveness of debt. This will allow individuals and businesses time to recover from a financial downturn and not overload the system with unpaid debt obligations, which have caused banks to increase their fines/penalties to recover such losses. The automated system's conservative lending formulas will prevent individuals/businesses from overextending themselves, which will minimize the total number of bankruptcies from occurring as well.

   Overall, converting to a comprehensive automated banking system would result in a more reliable, stable, and efficient monetary system for the nation.