On 7th September 2015 Positive Money hosted an event " Making Money Work: can innovations in monetary policy promote long-term prosperity?", with Lord Adair Turner, former Chairman of the Financial Services Authority, and now Chairman of the Institute for New Economic Thinking. Lord Turner gave a talk on how the monetary system works, the dangers of debt-fuelled growth and monetary financing as a new monetary policy tool that should be considered by governments and central banks. Here's a script of his speech [emphasis added]: It’s a pleasure to speak at an event organised by Positive Money, an organisation which has rightly focused attention on a fundamental issue of macroeconomic theory and policy – the inherent nature and function of money, and the mechanisms by which purchasing power is created within our economy. I do not in fact agree with the radical policy change which Positive Money proposes – the abolition of fractional reserve banks and a move to 100% reserve banking.
There are a number of problems with our current monetary system, in which the vast majority of money is created by banks, when they make loans. At Positive Money we try to unravel the issues related to money creation and raise awareness about them. In doing so we hope to arm everyday people with the necessary means to campaign for change. So today I thought it would be worth highlighting one of the major benefits to the Sovereign Money system, and explain one of the primary reasons as to why we want to redefine money.
Positive Money has today released a report showing that stripping the banking sector of its ability to create money, a proposal endorsed by e.g. Martin Wolf, Chief Economics Commentator of FT, would not result in a shortage of credit.