Surely not! How could anyone possibly suggest that P2P lending markets could even sit at the same table as the wholesale lending or repo markets.

No prizes for who can guess which one is currently completely frozen up and which is booming.

The speed at which banks have stopped lending to their clients and to each other surely is a sign that the current banking system has been built on very shaky foundations.

No amount of regulation is going to change this. The flaws of modern banking are plain for everyone to see. The combination of fractional reserve banking and a fiat monetary system exaggerates the credit cycles and is prone to breakdown, be it over a number of decades, even as central banks and governments print money out of thin air in an attempt to save the system.

But perhaps the current banking model is the best of a bad bunch. What could conceivably replace the current system!? We just need to deleverage the existing mess and start again but keep things under a tighter rein.

Well, I don’t buy that.

I envisage P2P lending markets in 5 or 10 years that have the depth and liquidity to support a mass participation credit system, without the flaws of over leverage and the domino effect of the current institutional markets.

The internet is changing the way that the end consumer can participate in markets. The day is on us where consumers will not just take a lending or borrowing rate from their Bank, but they can be part of the actual price discovery process.

I believe that a financial system that is directly populated by millions of individuals and companies would be far more stable than our existing system when it is in the hands of a few highly leveraged participants.