I would reform it around one principle: **protect ordinary deposits and payments, while making long-term productive investment easier and safer—not by forcing banks to make bad loans.**

## 1. Separate essential banking from speculation

Require banks that hold ordinary people’s deposits and operate the payment system to maintain very strong capital and liquidity buffers. Riskier trading, derivatives, and highly leveraged investment activity should either be conducted in separately capitalized subsidiaries or face much stricter limits.

If a speculative subsidiary fails, taxpayers and depositors should not be forced to rescue the whole institution. The goal is not to eliminate risk; it is to stop private profits from being combined with public bailouts.

## 2. Create a public industrial-finance channel

Commercial banks are poor at financing projects whose payoff may take ten or fifteen years. I would expand a professionally managed public development-bank network—similar in principle to Germany’s KfW, but with strict transparency and independent audits.

It could provide:

- long-term loans for factories, energy, transport, and infrastructure;
- first-loss guarantees for genuinely new investment;
- credit for startups moving from research to production;
- co-financing alongside private banks;
- emergency support for strategically important firms, with conditions attached.

The public bank should not choose politically connected winners. It should publish its criteria, disclose beneficiaries, measure jobs and productivity, and withdraw support when milestones are missed.

## 3. Reward new capacity, not asset inflation

Loan guarantees and subsidies should apply mainly to:

- new machinery;
- research and development;
- worker training;
- energy and transport infrastructure;
- construction or expansion of productive facilities.

They should not primarily subsidize buying existing property, share buybacks, speculative real estate, or mergers that create no new capacity.

A bank receiving a public guarantee should have to show that the loan produced additional investment—not merely refinanced an old asset.

## 4. Build alternatives to bank loans

Europe relies too heavily on banks. Innovative companies often need equity, convertible finance, venture capital, or patient institutional investors rather than conventional debt. The EU itself says innovative firms and SMEs cannot rely solely on bank financing and is trying to connect savings with productive investment through its Savings and Investments Union. <citation src="1"></citation>

I would therefore:

- create a genuinely integrated European equity market;
- simplify cross-border investment and insolvency rules;
- support public-private venture funds;
- make it easier for successful companies to scale and list publicly;
- develop long-term pension investment, with strong consumer protections;
- standardize information so small firms can attract investors without the cost of a giant corporation.

This matters because a startup with no collateral should not be forced to finance itself like a mature property company.

## 5. Make banks explain rejections

When a bank rejects a small-business loan, it should provide a meaningful explanation: cash-flow concerns, collateral, sector risk, debt burden, or regulatory capital requirements. Firms should be able to appeal to an independent credit-review service and receive help restructuring an application.

Banks should also report lending by purpose—productive investment, property, consumption, refinancing, and financial speculation—so the public can see where credit is actually going.

## 6. Attack concentration and conflicts of interest

I would strengthen competition by making it easier for customers and companies to move accounts, requiring interoperable banking data, and scrutinizing mergers more aggressively. A banking system dominated by a few institutions can charge high fees, ration credit, and lobby regulators effectively.

Bank executives should face personal consequences for fraud, concealed risk, falsified accounts, and reckless conduct—not merely pay a corporate fine that shareholders absorb.

## 7. Keep the central bank independent—but broaden accountability

The ECB should remain independent enough to prevent elected governments from simply printing money to cover every deficit. But independence should not mean insulation from democratic scrutiny.

I would require:

- clearer explanations of how interest-rate decisions affect investment and employment;
- stronger hearings and questioning by the European Parliament;
- publication of more detailed information about emergency lending and collateral;
- regular assessments of whether monetary policy is worsening regional or sectoral inequality.

The ECB should not decide which factory gets funded. But elected governments should be responsible for industrial strategy, public investment, taxation, energy costs, training, and the rules that shape private credit.

## The key distinction

I would **not** impose crude lending quotas such as “banks must lend 20% to startups.” That would encourage cosmetic lending, political favoritism, and hidden losses. Instead, I would make productive lending more attractive through public guarantees, development finance, competition, equity markets, and transparent risk-sharing.

The current system is not necessarily failing because every banker is corrupt. It is failing because the incentives are rational for each bank but harmful in aggregate: property and existing large firms look safe, while innovation and new factories look risky. Reform means changing who bears the risk and who receives the reward—so society does not privatize profits, socialize losses, and then wonder why savings fail to become productive investment.