Josh Ryan Collins, Senior Researcher at the New Economics Foundation and co-author of “Where does money come from?” was speaking at Just Banking Conference on 20th April about the banking system, and its influence on growth and financial instability. (25 mins)
It’s really important for campaigning organisations, if we’re trying to change this system, to really understand this stuff.
History shows us and economic anthropologists and historians have done a lot of research to show us that many thousands years before the invention of coins and gold and these commodities, there was actually accounting taking place – records of debt and credit.
The reason we use Sterling rather than any other piece of paper is essentially because we can make tax payments with it.
There is this popular explanation that the Bank of England can control the amount of money that is created by banks by having a reserve ratio. In reality, the banks make decision about how much credit to create and the central bank is forced to respond, to accomodate this volume of lending.
This is a dysfunctional financial system, it is not working for society, for the economy. It is highly inefficient allocation of capital going on here. It’s totally unsustainable in every sense of the word.
Josh is also a Director and one of the founders of the Brixton Pound, the largest sterling-backed complementary currency in the UK, based in his native South London. He is studying for PhD in Finance examining historical examples of public credit creation at the University of Southampton and trained in Sociology.
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