Create, or probably relax, regulations and create technology to allow the existence of very small banks, or more specifically, lending institutions. At the smallest level are lenders being able to personally observe -- use personal or intimate knowledge not accessible to a larger lender -- a potential borrower to gauge the degree of risk of a loan. Such close observation and examination can mitigate the moral hazard and adverse selection problems.
Of course, informal loans between individuals already happen: make it easier. The inspiration is microlending and its hypothesis that poor people face a less-than-efficient liquidity constraint.
Lenders continue to borrow from larger lenders, as is current practice: it just extends down further.
Many devilish details. Probably also need to fight political lobbying by larger banks who don't want new competitors.
Who can trust whom is a massively difficult problem even at the smallest level. Can more market mechanisms actually induce better solutions?
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