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Full Nationalisation of RBS?

According to today's Daily Telegraph, the UK government has discussed full nationalisation of RBS - click here for the story.  The cabinet apparently believes that a full nationalisation will enable the bank to lend more freely to business.  However, this assumes that there is a pent-up demand for bank finance and that RBS has funds to lend.  Full nationalisation makes no difference to either of these.  In addition, full nationalisation could lead to RBS becoming a bank run in the interests of the government's supporters rather than taxpayers as a whole.  

Click here to see an interesting article over at VoxEU on state banks and lending.

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