On Monday 28th January 2013 the Swiss national television’s main economic programme „Eco“ reported for the first time on monetary reform.

Prof Joseph Huber, founder of the German monetary reform initiative Monetative, and Reinhold Harringer, former Finance Head of St. Gallen, now with the Swiss monetary reform initiative MoMo, presented their ideas on this subject.

The financial crisis has revealed the systemic risks of the financial industry for the economy. Regulations can only mitigate these risks, but can’t prevent them. The roots of the problem lie deeper. The main driver of the excesses of the financial markets is the creation of money by commercial banks: today only 10% of money supply is created by the Swiss central bank, private commercial banks creating the other 90% in the forms of bank deposits. Banks create this money when they make loans.

Money rules the world, but who rules the money?

Reinhold Harringer is troubled by the ballooning money supply. He wants money to be safe from inflation and bank runs.

Professor Joseph Huber has studied the field in depth. He bemoans the skyrocketing amount of virtual money, which critics see as a main cause of financial crises. Only a fraction of this money is for use in the real economy, while the bulk flows into speculation and inevitably causes harmful boom-bust cycles.

This could be avoided by using only central-bank money. Huber: “The money supply must be brought under control! Our monetary reform would make this possible. The state must reclaim its right to create money, issue currency, and reap the benefits from this. Private banks shouldn’t be responsible for providing the supply of money to the economy. They are here to provide services and financing and act as intermediaries between the savers and the borrowers.”

The Swiss National Bank refused to comment on these suggested reforms. Nor did it answer Eco’s question whether it had any control at all over the money supply.

Harringer sees a growing trend of people questioning this system. Huge debt causes countries to stumble from one crisis to the next. Harringer: “In Switzerland, the situation is still bearable. But elsewhere it’s a threat to life and limb.” Virtual money has real consequences.

*The quotes are condensed.

If you speak German, you can watch the program here:

[youtube height=”390″ width=”640″]https://www.youtube.com/watch?v=4vfBB0J4wy8[/youtube]