Third and finally, the traditional story misses the real function of private
banks, which is to solve an information problem in the purest Hayekian senses. That is,
banks are or should be specialists in risk assessment and risk taking. They should know their client, understand the local market and have their
pulse on the broad economy. Arguably, if properly structured, they can and should do this better than other entities such as governments. In other words, the proper role of
banks should be underwriting —
lend money, hold the debt, and bear the risk. Which is a long - winded way of getting to the main point of this post.