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Federal Reserve Bank of Kansas City
Economic Review
What should banks be allowed to do?
Charles S. Morris

The health of the U.S. economy is heavily dependent on the health of the banking system. Commercial banks support economic activity through a number of traditional services-taking deposits, making loans, and providing payment services. Many of today's large banking organizations, however, don't look much like traditional banks. Morris examines how the financial structure has changed over the years and resulted in more complex banking organizations that combine traditional banking and nonbank activities. The increased complexity may have also increased their risk. Increased risk, in turn, can endanger financial stability and the health of the economy, putting the public safety net and taxpayers at greater risk. One possible option to reduce costs and risks to the financial system and public safety net is to restrict some of the nontraditional activities that have become permissible for banking organizations in recent years.

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Charles S. Morris, "What should banks be allowed to do?" , Federal Reserve Bank of Kansas City, Economic Review, issue Q IV, pages 55-80, 2011.
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Keywords: Banks and banking
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