Creating a Sovereign Monetary System

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This proposal for reform of the banking system explains, in plain English, how we can prevent commercial banks from being able to create money, and move this power to create money into the hands of a transparent and accountable body.
COVER_Creating_a_Sovereign_Monetary_SystemIt is based on the proposals outlined in Modernising Money (2013) by Andrew Jackson and Ben Dyson, which in turn builds on the work of Irving Fisher in the 1930s, James Robertson and Joseph Huber in Creating New Money (2000), and a submission made to the Independent Commission on Banking by Positive Money, New Economics Foundation and Professor Richard Werner (2010).

Taking the power to create money out of the hands of banks would end the instability and boom-and-bust cycles that are caused when banks create too much money in a short period of time. It would also ensure that banks could be allowed to fail without bailouts from taxpayers. It would ensure that newly created money is spent into the economy, so that it can reduce the overall debt burden of the public, rather than being lent into existence as happens currently.

PDF Download:

Download Here (Free, PDF, 56 pages)


Download Spanish translation here:

Creando un sistema monetario soberano


  • Part 1: Executive Summary
  • Part 2: Advantages of switching to a sovereign money system
  • Part 3: Reforms to the banking system
  • Part 4: Reforms to money creation and monetary policy
  • Part 5: Making the Transition
  • Part 6: Responses to common critiques
  • Appendix: Balance sheets pre- and post-transition


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  • Jolyon Lovell

    The problem is that it’s not a boom bust economy for the very wealthy it’s more like a sow and harvest. The vested interests gain too much for them to want to allow such reform.

  • David Physick

    I worked almost 30 years for one of main UK High Street Banks, a Quaker born institution. When I started work in 1977, a senior manager remarked, “We will never lend more than 8x our capital base nor will we lend more than 85% of our deposits. To do so would bring our downfall.” Therein lay the conservative prudence of 300 years of success. “In the public interest” seems to be mean to drive up economic output, which now manifests itself in the consumerist society. We’re all like the seagulls in Finding Nemo squawking, “Mine!, Mine!, Mine!”. Make things to last. Stop building in obsolescence. A “circular economy” of lease-based ownership rather than outright ownership may help soften the need to “create money”?

  • Savinia Marie Parker

    It is all enslavement of the sovreign people by thieves and crooks.GET RID OF IT!!

  • Boztheblogger

    I hope you don’t mind, but I have copied some of your material to put on my blog MODERN TIMES IN MUDSHIRES at to help you further spread your ideas as I am a passionate believer in the desperate need for banking reform as the current system is lethal.

    Also, on reading your pdf I found what may be an error, although it can be construed as correct if what you intend to mean is that wealth is also transferred from ‘those who can get on the housing ladder’ to the banks. But, if that is the case then it is still unclear that those who can get on the housing ladder are also transferring wealth to the banks (which they are). There are two separate ideas here, both of which are valid and both should be mentioned – just separately so it is more understandable.

    You wrote; (page 15 8. SLOWING THE RISE IN INEQUALITY

    on the pdf)

    Problem: House price bubbles have the effect of transferring wealth from the young to the old, and from those who can get on the property ‘ladder’ and those who cannot. This is a significant channel through which wealth inequality is further increased.

    presumably is intended to mean:

    Problem: House price bubbles have the effect of transferring wealth from the young to the old, and from those who cannot get on the property ‘ladder’ to those who can. This is a significant channel through which wealth inequality is further increased.


    • SAM

      Simply ‘write off’ more than 80% of the value of the house. (Iceland made banks write off anything more than 110% of the security’s value). Fark the banks for lending/speculating especially when they plunged global economies into chaos to force you on credit cards etc. I bet drug dealers have more morals than getting nice people hooked on debt.

  • Eric

    I think your proposal would be a great improvement, and perhaps the most feasible of alternatives. Soddy was the most coherent and cohesive of the money reformers, so much so that Fisher and others later cribbed his work (without citing him). However, I think Soddy’s perception was colored by the tradition of commodity currency and the prevalence of cash as a means of payment, and that had he lived today he might have preferred a system of interest-free credit over the stream-of-tokens approach.

    I would turn your proposal on its head, give the payment system and the allocation of credit over to the state, and give the money issuing power to private citizens. An example by E. C. Riegel of how such a system could work is here:

    Riegel, though, would have put merchants in charge of the system rather than the state. Ellen Brown offers a less polemic and easier to read variant, with the state at the helm, here (PDF):

    Despite Riegel’s claim that his system (essentailly Mutual Credit) would not be inflationary, I believe that inflation is inherent in any system of profit and loss. That could be addressed by using the purchasing power that’s normally lost to inflation to pay down debt, basically demurrage but expiring debt at the same rate as money. Done properly, this could have the effect of providing a basic income for all that is actually disinflationary, relieving us from disastrous policies of targeting production at the number of employed rather than the size of the population.

    Sorry for bloviating.

  • Ursmare

    Q: Is all new money created via debt?

    • Phil

      97% of the money supply in the UK is created by debt, the remainder issued by the Bank of England. All money created by private banks is created by debt.

  • Justin Walker Why won’t Positive Money go where the truth is? Why won’t it support a very successful historical precedent? Very strange!

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