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1. Policies for the Current Economic Crisis

public money creation

NEW: A Guide to Public Money Creation: Outlining the Alternatives to Quantitative Easing

(Report, 55 pages)

More and more people critique the Bank of England’s current Quantitative Easing programme and call for an alternative. There is a number of unconventional monetary policy proposals, also known as ‘Helicopter Money’, ‘Overt Monetary Finance’, ‘Strategic QE’, ‘Green QE’, ‘Green Infrastructure QE’, ‘People’s QE’ and ‘Sovereign Money Creation’. Each proposal will have different implications for the economy. This guide will help you better understand QE and each Public Money Creation proposal.

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Recovery in the Eurozone QE for people helicopter money

Recovery in the Eurozone: Using Money Creation to Stimulate the Real Economy

(Report, 49 pages)

This report shows that the European Central Bank’s Quantitative Easing programme will fail to deliver the type of recovery that the Eurozone needs. Instead the ECB could create new money and inject this money into the real economy rather than the financial markets. Actually, our estimates indicate that putting newly created money into the real economy could be up to 14 times more effective at growing the economy than conventional QE.

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Sovereign Money (Final Web)-1

Sovereign Money – Making the Recovery Sustainable

(Report, 60 pages)

Sovereign Money proposal explains how the Bank of England and the government could make the recovery sustainable by creating a relatively small amount of money and spending it into the real economy. This would lead to a boost in jobs and employment, and stop the current debt-fuelled recovery turning into another crisis.

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A Scottish Currency? – 5 Lessons from the Design Flaws of Pound Sterling

(Report, 10 pages)

If an independent Scotland wished to establish its own currency, there is little sense in modelling the currency on a design that has already spectacularly failed many times in the UK, Europe and the US.

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2. Digital Cash & Payments

digital cash

Digital Cash: Why Central Banks Should Start Issuing Electronic Money

(Report, 36 pages)

This report explains how all citizens could be given the option to store digital cash at accounts at the Bank of England. These accounts could be administered by private firms which compete with each other to provide payment services, debit cards and account information. Unlike traditional banks, they wouldn’t take any risk with customers funds, and wouldn’t require taxpayer-backed deposit insurance. The report also outlines some other potential benefits of adopting Bank of England-issued digital cash.

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Increasing Competition in Payment Services

(Report, 14 pages)
Update: The Bank of England has now agreed to implement the changes that we recommended in this report – full details here.

Since the crisis the government has been keen to encourage more competition between banks. Their main focus has been making it easier for people to switch their current account between different banks. But we think this misses a bigger opportunity: there is much more potential for competition from technology firms and mobile app developers, who could develop current/checking accounts and more user-friendly ways of handling your money and payments.

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3. A Sovereign Money System

Cover - Sovereign Money An Introduction - Border

NEW: Sovereign Money: An Introduction

(Report, 64 pages) This report presents a reform to the banking system that would remove the ability of banks to create money, in the form of bank deposits, when they make loans. It would transfer the ability to create new money exclusively to the state, creating what we have termed a ‘sovereign money’ system. Similar proposals have been referred to as ‘100% money’ or ‘full reserve banking’. However, there are some subtle technical differences between those proposals and the one in this paper.

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Modernising Money - Click for Free Preview

BOOK: Modernising Money: Why Our Monetary System is Broken, and How it Can Be Fixed

(Book, 336 pages)
The book explains, in more detail than ever before, exactly how the monetary system can be fixed. The product of three years of research and development, these proposals offer one of the few hopes of escaping from our current dysfunctional monetary system. It is detailed but accessible to non-economists. (2013)

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Will a sovereign money system be flexible enough?

(Report, 19 pages)

Some critics have argued that a sovereign money system, in which banks are unable to create money, would not be flexible enough to meet the needs of an economy. In response, this paper explains the range of policy options that mean that a sovereign money system can be as flexible – or inflexible – as authorities would like it to be.

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Would there be enough credit in a sovereign money system?

(Report, 37 pages)

Some economists, journalists and politicians have claimed that Sovereign Money proposals, in which banks are not permitted to create money, would result in the economy suffering from a shortage of credit. This report deconstructs the underlying assumptions behind the criticisms with empirical evidence and shows that stripping the banking sector of its ability to create money would not result in a shortage of credit.

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Accounting for Sovereign Money: Why state-issued money is not ‘debt’

accounting for sovereign money

(Briefing note, 9 pages)

In this briefing note we show that according to the International Accounting Standards and International Financial Reporting Standards, the guidelines used by accountants globally, sovereign money should be recorded as equity of the state, rather than debt. This initially counterintuitive result makes sense when we consider the way that sovereign money, or indeed any national currency, gets its value.

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Draft Legislation

Draft Legislation

This unofficial draft bill shows how our proposals could be implemented in law in the UK parliament. (April 2013)

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4. The Current Monetary System & its Consequences


BOOK: Where Does Money Come From?

(Book, 140 pages)
What is money? How is it created? How does it enter into circulation? These are simple and vital questions it might seem, but the answers remain contested and often muddled. This book, published by the New Economics Foundation, provides a comprehensive overview of how the system actually works in non-technical language, and has already replaced the usual banking textbooks in some UK universities. (2011)

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our money

Our Money: Towards a New Monetary System

(Booklet, 74 pages)This booklet explains, in plain English, what money is and how our current monetary system came about. It discusses the problems inherent to the present system and proposes an alternative.

It also explains how the current monetary system restrains us in addressing our economic, social and environmental problems, and even worsens them. It discusses the transition to a system that would work better, the main traits of that system, and the reasons why such a better alternative is hardly considered at present.

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Graham Hodgson - Banking, Finance & Inequality

Banking, Finance and Income Inequality

Inequality has increased continuously over the last thirty years. Many factors contribute to this growing gap, but one of the most significant is least understood: the role of money creation by banks. The evidence compiled in this paper suggests that there are several factors contributing to the growth of inequality, but at the heart is the operation of the banking system.
(Report, 16 pages, 2013)

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Banking vs Democracy

Banking vs Democracy

This report finds a banking system that has more ‘spending power’ than the democratically elected government, no accountability to the people, and massive concentration of power in the hands of a few individuals. (2012)

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5. Academic Publications


A response to critiques of ‘full reserve banking’

In this response to critiques of ‘full reserve banking’ or ‘sovereign money’ proposals, we challenge four of the main criticisms made by Fontana and Sawyer (this issue): (i) the impact of the proposal on government finances and fiscal policy; (ii) the impact of the proposal on the supply of credit to the real economy; (iii) the danger of private money creation re-emerging in the shadow banking sector; and (iv) the argument that shadow banking, not commercial banking, is the real source of financial instability.omy. (2016)

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Quantitative Easing in the Eurozone: a One-Year Assessment

After more than a year since the initial inception of the ECB’s quantitative easing programme, a review of its impact reveals that policy makers should think twice before further expanding the programme–and could benefit from considering more direct ways of increasing spending in the real economy. (2016)

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