The World Development Movement leads a campaign to stop bankers betting on food. WDM is campaigning to put pressure on the UK government to back European proposals regulating betting on food prices in financial markets.
Banks are earning huge profits from betting on food prices in unregulated financial markets. This creates instability and pushes up global food prices, making poor families around the world go hungry and forcing millions into deeper poverty.
We need systemic reforms to create an environment where speculators will be discouraged by the design of the system rather than regulations, but in the meantime we encourage everyone to support the campaign.
In the current monetary system banks create new money, in the form of the numbers that appear in your account, through the accounting process they use when they make loans. Bonuses, commission and other incentive schemes encourage junior bankers to lend as much as possible so the amount of money in the economy soars, fuelling an artificial boom. The incentives for the boards of large banks lead them to favour using this newly-created money for speculation.
Positive Money reform proposals will re-align risk and reward, so that those who stand to gain from the upside of risky investments also stand to take the downside. Whenever there is a misalignment between the risk and the reward, there will be moral hazard and excessive risk taking by whoever stands to gain from the upside. This problem is rampant in the banking sector and was another major contributor to the crisis. Our proposals seek to remove this misalignment of risk and reward. They aim to create an economy where entrepreneurs, innovators and the real economy can thrive by – as much as possible – ensuring that investment goes to businesses, science and technology, rather than into asset price bubbles or financial market speculation.