This is an excerpt from James Robertson's newsletter. James Robertson is the co-author of the book Creating New Money: A Monetary Reform for the Information Age (2000). Positive Money proposals are heavily based on this work which in turn builds on the original proposal for „Full Reserve Banking“ by Irving Fisher.
Archive for August, 2014
Under the current monetary system customer deposits provide banks with a cheap source of central bank reserves, which are required to make the payments to other banks that may result from the issuing of loans. (Banks acquire central bank reserves (base money) when payments are made to their customers’ bank accounts.) However, despite helping to fund the loans, depositors have no say and little idea over the use of ‘their’ money. They may therefore be unwittingly helping to fund activities that they disagree with.