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> Banks are already subject to competition from other banks. They are also in a cartel with the other banks, the sense that you can't access the financial syst

by rlpb 5y ago

> Banks are already subject to competition from other banks. They are also in a cartel with the other banks, the sense that you can't access the financial system at all without one of them. For example, charges to send payments internationally are often vastly more expensive than the actual cost to the banks. They can do this because they aren't competing in this kind of niche area.

falcolas 5y ago
> For example, charges to send payments internationally are often vastly more expensive than the actual cost to the banks I think you can attribute that one to capitalism, not collusion. Profits are important for banks. It's a rare for-profit institution provides services at cost. Any entity can join the "send money internationally cartel", but they have to adhere to the laws in both countries. This is a loophole that cryptocurrencies are bypassing today, but I expect the law to catch up in this area, and it won't be pretty.
- rlpb 5y ago
  > It's a rare for-profit institution provides services at cost. In a healthy market, competition forces down the price of services approach such that they approach cost. A large profit margin can indicate a free market failure, such as a barrier to entry. (it may also represent some kind of necessary capital investment for entry, but I don't think that's the case here)
  - falcolas 5y ago
    > it may also represent some kind of necessary capital investment for entry, but I don't think that's the case here Discounting laws, registrations, offices, staff, etc., you would still have to distribute sufficient capital between nations to provide for the transfer of money before the actual money itself can be transferred. The shifting of money between entities within a single country can take several days, and most international money transfers are expected to happen in hours, not weeks. It's a low risk loan - given from one branch of your own company to another - but you still have to have the money to loan out.
lottin 5y ago
It depends.. for example international wire transfers within the European Union are free. Transfers to other parts of world can be more expensive. So I'm not sure that the problem is a lack of competition.
- rlpb 5y ago
  > for example international wire transfers within the European Union are free ...because of regulation, not competition.

by rlpb 5y ago

falcolas 5y ago

> For example, charges to send payments internationally are often vastly more expensive than the actual cost to the banks I think you can attribute that one to capitalism, not collusion. Profits are important for banks. It's a rare for-profit institution provides services at cost. Any entity can join the "send money internationally cartel", but they have to adhere to the laws in both countries. This is a loophole that cryptocurrencies are bypassing today, but I expect the law to catch up in this area, and it won't be pretty.

rlpb 5y ago
> It's a rare for-profit institution provides services at cost. In a healthy market, competition forces down the price of services approach such that they approach cost. A large profit margin can indicate a free market failure, such as a barrier to entry. (it may also represent some kind of necessary capital investment for entry, but I don't think that's the case here)
- falcolas 5y ago
  > it may also represent some kind of necessary capital investment for entry, but I don't think that's the case here Discounting laws, registrations, offices, staff, etc., you would still have to distribute sufficient capital between nations to provide for the transfer of money before the actual money itself can be transferred. The shifting of money between entities within a single country can take several days, and most international money transfers are expected to happen in hours, not weeks. It's a low risk loan - given from one branch of your own company to another - but you still have to have the money to loan out.

lottin 5y ago

It depends.. for example international wire transfers within the European Union are free. Transfers to other parts of world can be more expensive. So I'm not sure that the problem is a lack of competition.

rlpb 5y ago
> for example international wire transfers within the European Union are free ...because of regulation, not competition.