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As you all probably know Carlos Vasco decided to run for the president. One of his economic proposals was the creatinon of the banking system. This is an article for this that would like to learn more about this system. Let me just say that this system is still being worked on so what I say here will probably not be a 100% what may be proposed to the congress. Also, I will try to make it as easy to understand as I can but its OK if someone does not get it. This system may be a bit confusing because it is made of many parts, and is based on a real life system.

Lets just start with saying that this process will involve 3 parties.
The center of a private banking system will be a central bank. Central bank will be responsible for a greading system (AAA, AA, A, BBB etc, I am not going to explaing why this system is a part of the raft draft but this is very likely to change.) A person that wants to take a loan will have a grade based on how likely that person is to pay back that loan (AAA is the best) The central bank will also be responsible for giving out "insurance" on a loan. Insurance will be connected to the interest rate that is added to the loan. This way the better grade one has the lower interest rate he/she will have.How does one get a better grade? Simply by borrowing and paying back over time a citizen will be building up their "credit score". This will give people a reson to pay back their loans.
Let me just add here that a grade assigned will probably be connected to the amount of money one can borrow at once

Now lets get to the private banks. So how does a private bank start our? After asking for a permission congress will vote if that person is trusted enough to run such important institution. (This part may change) After a "private bank" gets the permission from congress he will have access to buy "insurance" from a cental bank. When this bank gives out a loan he will set his own interest rate+ the interest rate set from the cental bank. Again, interest rate set by the central bank will be connected to the "score" that a person getting a loan is assigned with. After the money is paid back the "score" gets better and the next time this person takes out a loan interest rates will be lower. Here I would like to add that the interest rates added by the "private bank" will be low to encourage borrowing. This may be done by using a supply/demand rules of the market ( if the interest rates are to high congress will encourage creating more banks to compete with each other) or simply be creating a "sealing". Here I will add that banks "may" also be greaded and the central bank "may" hold assets of the private banks but I am not going to go into that because work is still being done it this area.

The borrower is the last party in this system. I think that I covered most of the facts in the last two sections. Here I will cover scary part, what if?? What if a person does not pay back the money? Lets start that a bank is taking this risk every time the money is given out. The main purpose of the greading system is to show provate banks if a given person can be trusted. If a person for example an "AAA" score the private bank will know that this person has been borrowing many times and has always returned all ofthe money+the interest rates on time. This kind of a person will be given out a loan on a large sume for a very low interest rate. ( with an AAA score an insurance polict bought from the central bank will be somewhere like 1% to 0.5% or even not added at all, there is still work to be done on exact numbers) If a person has a "CC" score for exaple ( the lowest is "C") then a banker knows that this peron has eighter a very bad creadit score because he/she was not pating back the loans or because this is a new borrower. (This person will be able to borrow a small amount of money on a large interest.) I just want to add that new borrowers will have an advantage over the ones that defoulted on loans by letting them advance faster. (For example after the first loan pain back the score will increase from CCC to C or a BBB, but again, there is still work to be done in that area. But lets just assume that a person is not paying back their load. The "insurance policy" goes into an effect and a private bank can get his/her money from the central bank. ( Probably not 100%, still working on the numbers). What happens to the borrower? His score goes down (by a lot), probably not getting another loan ever again. This person may also be moved out of forum. I also want to add that this option will have to be used wisely, we are not going to punnish people (too much) who REALLY can't pay the loan. This people will be given a chance to work and get out of debt over a longer period of time. On the other hand, people that want to cheat the system will be punnished 100%.

Here I will just say that this is not all, there is much more that I will not mention in details or at all. Here are some examples.
-Loan ONLY to colombians
-using houses as safeguards

and remember, vote Carlos Vasco for president!!!