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 consolidated automated bank at the federal level would resolve the various problems that have been plaguing the industry.

   An automated banking system that utilizes conservative lending formulas would protect the system from overextending itself with bad loans. Only fixed-rate loans will be offered which will prevent the risks associated with variable-rate lending practices.

   In addition, the automated banking system will only be able to lend money based on the capital that it has in reserves. In the past, banks have overextended themselves and lent more money than they actually had on hand. This is a serious issue and is the primary reason on why over 450 banks failed during the 2008-2012 financial crisis.

   Similar protection would likewise exist for deposits since the reserves in an automated banking system will always remain in cash. Deposits will never be risked with unsecured debt. This alone would have prevented the Silicon Valley Bank failure of 2023.

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

   A major advantage of having a consolidated banking system 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 which provides a false sense of security since the fund is inadequate towards insuring all deposits of the nation.

   Some may argue that the disadvantage of having a centralized bank like this 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 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.

   Another advantage of an automated banking system is that bankruptcy rules will 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 fines/penalties to recover such losses). 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.