Vatican Criticizes Banking, Calls for ‘New Economy’
The Vatican’s Congregation for the Doctrine of the Faith and Dicastery for Promoting Integral Human Development published a magisterial teaching calling for governments to increase financial regulation.
The Vatican’s Congregation for the Doctrine of the Faith and Dicastery for Promoting Integral Human Development published a magisterial teaching calling for governments to increase financial regulation, citing the 2007 economic recession as reason to “rethink the obsolete criteria that continue to govern the world” and “eliminate the inequality so pronounced today.”
The Oeconomicae et pecuniariae quaestiones, published on May 17 and approved by Pope Francis, makes no specific policy recommendations though it strongly criticizes the complexity of some financial services. The teaching recommends the creation of “a new economy, more attentive to ethical principles, and a new regulation of financial activities.”
“Correspondingly, every time unreliable economic-financial instruments are introduced and diffused, they put the growth and the diffusion of the wealth into serious danger creating systemic problems and risks that amount to the ‘intoxication’ of the organism,” the document states.
Says Banking Fuels Progress
Edward Hudgins, director of research for The Heartland Institute, which publishes Budget & Tax News, says finance is good for people.
“If you look at the last few centuries, and even just the last few decades, you see incredible economic progress,” Hudgins said. “The financial system is basically the heart that pumps the lifeblood of capital into the economy.”
Hudgins says government bureaucrats, not bankers, are to blame for the flaws in the economic system.
“There are problems with the current system, but the problems are in fact government intervention and manipulation,” Hudgins said. “Take the housing bubble, which the document alludes to. Why was there a housing bubble? It's because American regulators strong-armed bankers into making loans to people who could not keep up the payments.”
Calls for Less Regulation
Yaron Brook, chairman of the Ayn Rand Institute, says the problem with the nation’s financial system is an excess of government regulation.
“The fact is the banking industry is the most regulated industry in the United States,” Brook said. “There are thousands and thousands and thousands of pages of regulations.
“What the banking industry really needs is freedom,” Brook said. “It needs to be released from masses of regulations that have been imposed on it since the 1930s, so that it can effectively function as the provider of capital in the economy.”
A freer financial system is a healthier system that works for everyone, Brook says.“I think the healthier—the less regulated, the freer—the banking system, the more effective capitalism becomes,” Brook said.