Quora Answer: Given the Global Economic Crisis, Which Country has the Most Reliable Banking System?

The following is my answer to a Quora question: “Given the global crisis and recession, which country has the most reliable banking system?”

The reliability of a banking system depends on the legislative framework, the legal oversight, the competence of the people in the industry and the confidence of the client base.  Going by that criteria, the Nordic countries, Singapore, Germany, Switzerland, Liechtenstein, Luxembourg and perhaps one or two I have not named would be such countries.

Hong Kong is not on the list because there are regulatory concerns about its exposure to the Chinese market and the lack of transparency in basic economic data.  That means, like what happened in Shanghai recently, we do not have enough data to make informed decisions despite the fact that they handle a lot of money.

The US is not mentioned as among them because of concerns of its lack regulatory oversight and concerns about conflicts of interests since the very people advising the organs of state have also and will also work for the big banks and fund houses.

Much of Europe is weak in various areas, including their high public debt to GDP ratio, their weak near-term prospects and concerns about the Euro.  The UK is obviously of great concern, due to Brexit, and an incompetent political leadership.

The Australian banking scene should be discounted since Australia is primarily a commodity economy, and their system is geared towards that. They handle nowhere near the volume and value of transactions that Singapore, Frankfurt and New York do, and there are doubts it can cope in the near term.