New money should be directed to the real economy, not the financial sector

An article entitled “New money should be directed to the real economy, not the financial sector” published by Positive News on 22nd July 2013 explains the challenges of creating money, and how they can be used as opportunities for positive change.

Here is a short extract:

‘Creating money’ is often seen as a dangerous policy only used by desperate governments. However, all the money in either your pocket or your bank account has been created by someone initially. Cash is created by the Bank of England, and electronic money in your account – which makes up 97% of all the money in the economy – is created by banks, through an accounting process that banks use when they make loans.

“We can take advantage of the need to get new money into the economy and to create jobs, and also use some of this money to switch the UK towards clean and renewable energy”

We have a lot of work to do to win the argument that there are better ways of creating money than either leaving it to banks or putting new money into financial markets, and we’re keen to work with other organisations, charities, campaigns and individuals who want to get involved. But the good news is that the idea hasn’t been dismissed out of hand: the government’s recent Review of Monetary Policy, which was released with the last budget, explicitly permits the Bank of England to use what they call “unconventional policy instruments” in order to help the government “achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries.”