 Introduction
Over the last years, there has been a debate on whether commercial and investment banks should be separated or not. Especially after the crisis in 2007 when taxpayers had to pay billion in the US to bail out the banks, the need for a “ring fence” around retail banking operations became urgent. Universal banks use the retail deposit for their investment operations which engage great risks. When their investments fail, the states have to rescue them. These mega banks emerged after the Great Depression when such a mergence became possible mainly because of the deregulation of western financial services. However, if global capital markets agree in a ring fence or total separation, it is a procedure that will take place over a period of years. In this project a brief review of the debate that takes place around this matter will be presented, mainly by stating some of the ideas that are commonly discussed.

 The Glass-Steagall Act and how we got here
Recently President Obama proposed the separation of investment and retail banks, as it is believed that they were the main reason of the last financial crisis that started in 2007. Avgouleas (2010) points out that the mega banks were created after 1990’s due to the deregulation of the financial industry and they engaged great risk in their investment activities as the deposits (that were used for these purposes) were guaranteed by the government. Benston, G.J. (1994) points out that these mega banks became so large, that even if one of those banks was failed, it would cause a systematic financial crisis, as their role in underwriting and distributing securities makes them vulnerable. However, President’s Obama proposal was based on the Glass-Steagal Act. Benston, G.J. (1994) points out that in the past, steps were made in the US towards narrow banking. The primary law (Glass-Steagal Act, 1933) separated the