separation of banking

Separation of banking refers to the regulation that divides commercial banking activities (like accepting deposits and making loans) from investment banking activities (such as underwriting securities). This separation is intended to reduce conflicts of interest and protect depositors by preventing risky investment practices from endangering customer funds. For example, after the 2008 financial crisis, regulations like the Glass-Steagall Act were reinforced or reintroduced in some areas to keep these functions separate, ensuring banks focus on their core roles while minimizing systemic risk to the financial system.