INVESTIGATING DIVERSITY IN THE BANKING SECTOR IN EUROPE: THE PERFORMANCE AND ROLE OF SAVINGS BANKS

One motivation that was lacking in the United States was the need to help finance the national government. 7 In fact, the absence of a sizable outstanding national debt posed a problem in designing a system that would not compete with commercial bank lending activities. Sensitivity was high, as well, to the possibility that a nationwide postal bank might drain funds from local to big-city financial markets. To avoid this, the law provided that postal savings were to be deposited in solvent commercial (National or State) banks within the same city, town, village, or locality as they had been gathered, in proportion to those banks’ capital. The placements.

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