Ethical Banking and Reality-Constrained Credit Allocation: Toward a Stable, Transparent, and Production-Aligned Financial System

This paper develops a structural theory of financial stability grounded in the proposition that a financial system cannot remain durably stable if financial claims grow faster than the real productive capacity of the economy. Building from this law-like constraint, the paper introduces a model of reality-constrained credit allocation in which aggregate lending authority is anchored to the measurable productive support base of the economy and institution-level lending permissions are distributed according to lending quality, risk intensity, systemic stability contribution, and productive contribution. The analysis situates the model within the historical development of banking, endogenous money creation, modern financialization, central-bank stabilization, IMF-style adjustment, reserve-currency asymmetries, exchange-rate dynamics, and global monetary power structures. It argues that many recurring financial crises, inflationary episodes, currency disruptions, and stabilization interventions can be understood as differing manifestations of one underlying disproportionality: the divergence of symbolic financial claims from the real productive capacity required to sustain them. The paper proposes ethical banking not as a moral slogan but as a structurally disciplined form of finance in which the privilege of claim creation remains aligned with the carrying capacity of civilization itself. The framework is presented as empirically testable, operationally implementable in phased form, and compatible with existing monetary institutions under gradual transition. This work is intended as a contribution to financial theory, banking reform, macroprudential design, and the broader study of institutionally stable civilization.