Josh Ryan-Collins

Last week saw another major breakthrough in the monetary reform debate as leading UK economics commentator, the Financial Times’ Martin Wolf, argued that the power to create new money should be stripped from private banks and returned to the state.

Money may not grow on trees, but it does grow at a much faster rate – particularly when created by banks as interest-bearing debt. In modern economies, nearly all money is created in this way. To maintain a stable money supply, debtors must repay both the initial loan and the interest on the loan. This means we need either economic growth at a rate in line with the interest on the debt and/or inflation, both of which we’ve had a great deal of in the past century. But back in the real, natural world, there are limits to growth. The ultimate limit is energy, something all production requires. Humans require food to survive and re-produce. To create this food we need energy, energy that comes, ultimately, from the sun.

The International Monetary Fund (IMF) recently published a working paper arguing for the removal of private bank’s privilege of creating the national money supply.  The so called ‘full’ or ‘100%’ –reserve reform has a long history – but, with the Icelandic parliament actively investigating the proposal and little sign of current reforms rebooting the economy, might its time have come?

Today’s launch of the Bristol Pound (£B) represents a step change for the UK local currency movement, one which nef is very proud to have supported as part of our Community Currency 2.0 project.