Need to Maintain the Financial Sector

It is the time of so many banking failures around the world. Many of them are to be bailed out by the government by a specified stimulus package. I am having my own doubt over the reasonableness in extending such bail out to the sinking banks. It will certainly set bad precedents in the future prompting the management to be not so serious. Presently, lots of leading economists in the United States felt that the best solution to maintain the health of the banks is to nationalize them. Yes, I also feel that this will help the government to have better control on the functioning of the banks by instituting various rules and regulations. The stake made by the government in the banking sectors will enable it to take the overall control of the banking system which will prevent the easy collapse.

I am also certain that such control will ensure better governance of the banks by proper and periodical supervision and monitoring. Various leading economies like China and Japan are also thinking in the same line to nationalize the banks to avoid future global economic collapse.

It is also a point to note that the banking system has escaped from the collapse in various countries where they were nationalized. It is high time that the policy makers do not leave this vital sector in the hands of unscrupulous private elements which will render the social justice. The regulator of the country should stipulate the needed policy frame work within which the financial sector should perform. This will go a long way to maintain the health of the banks.