• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Go to Positive Money Europe

Positive Money

Making money and banking work for society

  • About us
    • Our vision
    • Who we are
    • History & highlights
    • Contact us
    • There are currently no vacancies available
    • In the media
    • Funding & Annual Reports
  • What we do
    • Educate & empower
    • Research and Policy
    • Campaign & local groups
    • Influence decision makers
    • In the media
    • International Movement
    • Events
  • Resources
    • Videos
    • Publications
    • Local group resources
    • Lobby your MP
    • Organise an Event
    • Policy resources
    • Shop
  • Press
  • Blog
  • Donate
  • Positive Money Europe

Reality check: Private banks create money (BBC News)

by David Clarke

The election campaign is generating new interest in Positive Money’s proposals, not least because of the Green Party’s manifesto commitment to put money creation in the hands of a new, independent monetary authority.

The BBC’s ‘Reality Check’ series includes an explanation of the party’s policy, and busts the most common myths about money creation:

There are two common misconceptions about how money currently works:

  • The Bank of England controls the amount of money circulating around the economy, perhaps by “printing money”
  • The ability of private banks to lend is limited by how much other customers have deposited in their vaults

Neither of these is quite true.

The vast majority of money is created by private-sector banks – not the Bank of England.

Positive Money, a group that argues for reforming the monetary system, says 97% of money is created by banks.

Each time a bank makes a loan, it essentially creates money.

And it is basically up to banks to decide how many loans they create.

Money then disappears when the loans are paid back.

So the Bank of England actually does not have much control over how much money there is circulating around the UK economy.

You can read the full article here.

In the News, Options for Banking Reform, Understanding Money & Debt

David Clarke

Head of Policy and Advocacy, Positive Money

David leads Positive Money’s influencing programme, encompassing political engagement and media relations.

Primary Sidebar

Get our latest campaign updates

Recent Posts

  • Quantitative easing “turbocharges” inequality: our evidence to the House of Lords
  • Surprise for Sunak: 60,000 demand climate action on frontpage of his local paper
  • QE or not to QE? Soaring inequality shows it’s time for a new macroeconomic approach
  • Update from Chair of the Board on Interim Leadership
  • Why GameStop reveals the flaws of big finance

Footer

Follow us on social media

  • Facebook
  • Instagram
  • Twitter
  • YouTube

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.


Privacy Policy, Terms & Conditions


Positive Money is a company limited by guarantee registered in England and Wales. Registered number 07253015.
Registered office: 307 Davina House, 137-149 Goswell Road, London EC1V 7ET.


Positive Money Europe