Automated Banking System

Solution
 
   Since the nation's monetary system should be as secure and reliable as possible, replacing the multitude of banks that exist today with a single and consolidated automated bank at the federal level would resolve many of these problems.

   Conservative lending formulas would protect the system from overextending itself with bad loans. Fixed-rate loans will prevent the risks that are associated with variable-rate lending practices.

   Lending money that is based on the amount of capital that the automated bank has in reserves ensures a more secure system. In the past, banks have overextended themselves and lent out more money than they actually had on hand. This is a serious issue and why over 450 banks failed during the 2008-2012 financial crisis. Banks essentially offered loans with fake money that they never had, which is clearly fraud.

   Similar protection would exist for deposits since the reserves in an automated banking system will always remain in cash. Deposits are never risked with unsecured debt. This alone would have prevented the Silicon Valley Bank failure of 2023. Banks have also kept the proceeds attained by investing their deposits. Which is immoral since depository institutions are not investment firms, nor do they have the depositor's consent, to invest such funds without their knowledge.

   The automated banking system will also provide a "hands-free" approach towards managing interest rates where rates are automatically adjusted by the ratio of reserves to lending. In the past, the prime interest rate was manually adjusted by the Federal Reserve in order to control inflation, which had nothing to do with the amount of capital in the banking system.

   A major advantage of having a consolidated bank at the federal 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 also removes the need for the FDIC insurance program that provides a false sense of security since the fund is inadequate for insuring all the deposits in the nation.

   Some may argue that the disadvantage of having a centralized bank is that it will eliminate the competition for better interest rates. However, there isn't much of a variation among banks today since their rates are based on the prime interest rate. The minor benefit of having slightly improved interest rates isn't worth the risk of a bank (or multiple banks) failing due to an economic crisis. An automated bank at the federal level is also non-profit that will provide efficient rates for all.

   Another advantage is that bankruptcy rules will change to reflect 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 fines/penalties to recover such losses. Also, the automated system's conservative lending formulas will prevent individuals/businesses from overextending themselves in the first place, which minimizes the total number of bankruptcies from occurring as well.

   Overall, a comprehensive and consolidated automated banking system at the federal level will result in a more reliable, stable, and efficient monetary system for the nation.