With the Eurozone crumbling and billions being allocated to bank bailouts, financial stability might seem out of reach.
But a group of Birmingham citizens are taking on this monumental issue and promoting a simple change to our monetary system that they claim could help stabilise our economy.
It’s widely known that the Bank of England issues banknotes and coins, but a surprising and little known fact is that 97% of the money now in circulation was created by private banks. This electronic money is created as debt whenever private banks make a loan.
Conservative MP Jesse Norman, who sits on the Treasury Select Committee, confirms that this is the case. “Commercial banks have the power to create credit—that is, money—by expanding their balance sheets. It is not widely understood how important this power is: of the money presently in circulation in the UK economy today, three per cent takes the form of cash; 97 per cent is in credit and deposits. This financial alchemy is an extraordinary privilege, which we as citizens and taxpayers underwrite.”
The solution, say ‘Birmingham Friends of Positive Money’, is simply to remove the ability of private banks to create electronic money and instead give this job to the Bank of England. This would mean that any new money created would be given to the government, allowing them to cut taxes or spend more on public services.
Jonathan Melhuish, 26, a member of the group living in Balsall Heath said that “It’s ridiculous that we’re effectively allowing the banks to print money! At first I didn’t believe it could be true but I’ve looked into it and actually it’s pretty clear, I was amazed. We really need to fix this, we need to turn that energy we saw in the Occupy movement into real restrictions on the banks. It’s time to democratise our money supply.”
But is such a move really practical? They claim so. The campaigners support a national organisation called Positive Money, who have set out in great detail how this change could take place and have even drafted the necessary legislation.
The problem with our monetary system and their proposed solution is set out in the hour-long, easy to follow documentary film “97% owned”, which is freely available online and will be screened at Ort cafe in Balsall Heath at 8.30pm on Thursday 21st June.
Entry free, all welcome.