What would be some of the features of a Catholic economic and banking system, in which no interest is charged, and the only assessment beyond the face value of the money being repaid, would be things such as administrative fees, paying salaries to the people who run the system (bank employees, mortgage originators, et al), physical plant for the bank, and so on?
First of all, depositors would put their money in the bank, but it would only be for safekeeping and trust purposes, a safer alternative to keeping the money in one's home. Then they could write checks on the money, have it put into electronic form, and so on. Credit cards would exist, but only as a promise of future payment of the money being borrowed, with, again, anything above the face value of the money would only be administrative and service fees, with no interest element and no concept of "time value of money" or compensation for risk.
Mortgages would work the same way. They would be zero interest, again, the money loaned to buy the house coming from savings deposits made by bank customers. The mortgagor would pay, for a 30-year loan, 1/360th of the original principal balance, plus the non-interest fees I described above. There could also be a premium of sorts to reimburse the bank for foreclosures, IOW, the entire pool of borrowers paying into a fund that would make the bank good for the money they are bound to lose in those 1 to 2 percent of loans that could be foreseen not to be repaid (one would hope, for reasons beyond the control of the borrower, such as financial catastrophe, death of the breadwinner, and so on). And perhaps "foreclosure" isn't the best word --- I would hope such a bank would work to keep innocent people who have fallen into penury (widows, orphans, those who have been injured or fall sick and cannot work to repay the loan) in their homes, and not be put out into the street. It would not be to keep "bounders" who simply don't pay back their loans in possession of their houses --- those homes would be fair game for repossession by the bank and sale to someone else.
The "pump-priming" money to get the bank started could come from the sovereign government (either a Catholic monarchy or commonwealth), and would be paid back as the bank began to receive deposits from customers. In this system, the sovereign would coin money (or issue fiat money, assuming a sovereign has the right to do so) commensurate with the growth of the economy and the value added by an ever-increasing population, not some sort of private reserve bank that creates money out of thin air, such as the Fed.
The only catch here, would be that you couldn't have every customer of the bank wake up one morning and decide to go down to the bank and take out all their money, as there would no longer be enough money to make new loans.
I'm very likely missing some of the "moving parts" here, so I'll welcome input.
Thoughts from the forum?