UNJUST ENRICHMENT

This looks like a very interesting and applicable element of law.

Does a bank unjustly enrich itself when it issues a loan?

Let's have quick think.

A potential customer goes to a bank and asks for a loan. The bank agrees, but does not tell the customer that (a) the money does not exist physically, (b) did not exist virtually until the loan was issued, and (c) the bank does not destroy the repayment but keeps it.

Thus the bank has enriched itself by the size of the loan plus interest. The customer may well believe that the bank has enriched itself, but by the interest only, for he or she does not know about fractional reserve banking and trusts the banks and his or government.

At the time the loan was issued the money for it did not exist, and I assume the money for that loan was created by a computer program.

Now the customer goes away, and works to repay that money.

So basically the bank has enriched itself, at the expense of the customer because it does not destroy the money upon its repayment. If it destroyed the capital, there may well be no argument. The thinking here is that the bank can create £10X from £X but needs the customers to create the demand for loans (the bank cannot create the money for itself, I assume), and the customer works for the money to repay the loan, while the bank simply created the money via a computer program but can use the repaid money to buy real stuff with.

The bank did not tell the customer that the money does not exist physically , nor that the money did not exist until the customer entered into a contract and accepted the loan.

So did the bank enrich itself unjustly?

If we add this to the FSMA 2000 and the other acts I believe are applicable, this law of unjust enrichment looks useful.