Adair Turner became the chairman of the UK’s Financial Services Authority the day after Lehman Brothers collapsed. He was one of the most senior banking officials from 2008 until 2013, so it’s fair to assume that he’s seen more chaos behind the scenes of banking than most of us could even imagine. While he’s never written an expose or biography detailing his experience of trying to rescue a fundamentally broken banking system, key insights have informed everything he’s said and written since. His latest book, Between Debt and the Devil, is no different.
Ben Dyson (formerly Positive Money)
Bank of England’s chief economist hints towards a digital form of central bank money to compete with bank-issued money
Last week Andrew Haldane, the Bank of England’s chief economist hinted that current monetary policy might be broken, and that other policies might be needed. He briefly hinted that one policy might involve the central bank issuing a form of digital cash that would end up competing with the bank deposits issued by commercial banks (and which make up 97% of all the money we use).
Why the failure of Kaupthing Edge teaches us nothing about full reserve banking (A response to Dow, Johnsen and Montagnoli)
In their paper "A critique of full reserve banking", Professor Sheila Dow, Alberto Montagnoli and Gudron Johnsen argue that the failure of one of the Icelandic bank's subsidiaries is evidence that full-reserve banking would not make the financial system safer. Here we explain why the case study is not applicable, and teaches us nothing about the impact of full reserve banking.
Would stripping banks of their power to create money cause a shortage of money, high unemployment and an economic decline? (Report)
Some economists and commentators have claimed that Positive Money’s proposals for a sovereign money system, in which banks are not permitted to create money, would leave the economy with a money and credit supply that is rigid, inflexible and unresponsive to the needs of the wider economy. According to one critic, such a system would result in “a shortage of money, high unemployment and low economic activity”.