‘QE for the people’ can happen without compromising Bank of England independence

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London, Friday 14th August 2015

Positive Money: ‘QE for the people’ can happen without compromising Bank of England independence

The UK’s leading research and campaign group for monetary reform is today rejecting claims that ‘people’s QE’ would represent an end of the independence of the Bank of England.

The group proposes a version of people’s QE called ‘Sovereign Money creation’, which unlike the model advanced by Labour leadership contender Jeremy Corbyn, would not change the existing mandate and targeting of the Bank of England’s Monetary Policy Committee.

Executive Director Fran Boait said, “Our proposal for Sovereign Money Creation is a smart innovation which could strengthen, not undermine the independence of the UK’s central bank. This isn’t about interfering with Bank policy, it’s about giving it the tools it needs to do its job of targeting inflation and maintaining financial stability. Under the current system, the Bank’s only way of influencing prices is via unsustainable money creation by commercial banks. This results in a build-up of household debt, which can only grow faster than salaries for so long before it becomes excessive and unaffordable.”

Under Positive Money’s “Sovereign Money” proposal, money created by the Bank of England could be used to finance an increase in public spending, a reduction in taxes or a “citizens’ dividend”. The decision about how much money to create would remain in the hands of the Bank’s Monetary Policy Committee, as it is now. Through Sovereign Money creation, the Bank could support a productive and stable economy.

Fran Boait said, “A common concern with Sovereign Money is that it would blur the boundaries between fiscal and monetary authorities. However fiscal and monetary cooperation has already been carried out by recent policies including:  Funding for Lending, Help to Buy, and Quantitative Easing. The difference with Sovereign Money is that the monetary and fiscal cooperation will have to be more explicit.”


For more information on Positive Money’s Sovereign Money proposal, including why it would not be inflationary or increase debt, please visit www.positivemoney.org/sovereignmoney or contact Fran Boait, Executive Director on 0207 253 3235, 07843 382 034 or at fran.boait@positivemoney.org.

Positive Money is a movement to democratise money and banking so that it works for society and not against it. Founded in 2010, we work to raise awareness and understanding of the fact that most of the UK’s money is created by banks as they issue loans. Our research has resulted in two books (Where Does Money Come From? and Modernising Money). In March 2014, the Bank of England released two articles in its Quarterly Bulletin confirming the explanation of money creation that we outlined in ‘Where Does Money Come From?’

More detail about Positive Money is available here:

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