Geoff Tily has some interesting and balanced analysis on the academic debate around money reform, in particular the debate between Giuseppe Fontana and Malcolm Sawyer, and Positive Money, which is currently playing out in the Cambridge Journal of Economics.
Ben Dyson (Positive Money)
Last week the Bank of England released a key paper that analyses the 'macroeconomics of central bank issued digital currencies'. The paper essentially asks what would happen if people could hold money electronically at the central bank, instead of having to use bank deposits (created by commercial banks). We wrote about it briefly last week but we're still working through the fine details of the 69-page mathematical model to figure out the implications for our work. In the meantime, the Bank of England's staff blog has just released a much more accessible discussion of the issues:
The Cambridge Journal of Economics (probably the leading journal of Post-Keynesian economics) has published an entire special issue on "Cranks and brave heretics: Rethinking money and banking after the Great Financial Crisis", inviting a range of academics to comment on proposals to stop banks creating money (amongst other ideas for monetary reform).
The Bank of England has just released its most significant paper yet. Macroeconomics of central bank issued digital currencies, by John Barrdear and Michael Kumhof, discusses the consequences of the central bank making a digital form of cash available to the general public, so that they are no longer forced to use bank deposits to make electronic payments:
Positive Money advocates a shift away from the current ‘debt-based’ monetary system, in which almost all money is created by commercial banks when they make loans, to a ‘sovereign money’ system in which only the central bank is able to issue new money. In the past, we’ve described sovereign money as ‘debt-free money’, because it is spent into the economy without any household or firm taking on further debt.