2019 got off to an exciting start at Positive Money, with our first ever meeting with Mark Carney, the Governor of the Bank of England – one of the most powerful figures not only in Britain, but also in the world’s money and banking system. You can watch part of our exchange here.
Having been identified as one of the most engaged participants in the Bank of England’s online Future Forum, I had been invited to a roundtable with the Governors of the Bank of England, which took place on Monday.
Wanting to make the most of this opportunity, and to make it as people-powered as possible, we asked our thousands of supporters what they want from the Bank of England. Over 1000 of you responded. This is what you told us:
In your opinion, which is the most pressing issue for the Bank of England right now?
- Inequality 35%
- Climate change 22%
- Risk of a financial crash 19%
- High private debt 13%
- High house prices 9%
- Inflation 1%
Right now, in whose interests do you think the Bank of England is working?
- The public’s 5%
- Big banks 62%
- Big corporations 33%
Which of these policies would you most like to see the Bank of England adopt?
- QE for people, for example, in the event of an economic downturn 31%
- Central Bank issued digital cash alongside physical notes & coins (so we no longer have to rely on private banks to use electronic money) 29%
- Stop subsidising high-carbon corporations 22%
- A requirement to have a certain quota of people on its decision making committees with professional experience outside of the financial sector 14%
Armed with these responses, I entered the Bank of England excited but a little nervous, and not really knowing what to expect.
As I’ll explain below, I left feeling frustrated by the experience in several ways, but one key takeaway is that senior people in the Bank are clearly aware of Positive Money and feel nervous about the large support we have from our movement across the country.
Unsurprisingly, the event was carefully managed by the Bank. Attendees from the general public were not informed of the agenda or given a chance to shape it, and the discussion was driven by the Governors, ensuring that the topics stuck to what they were most comfortable talking about.
Admirably, a friend and supporter of Positive Money in attendance made the bold move to interrupt the proceedings and ask about money creation, saying he thought the current system has “hugely damaging social consequences”. This question was parked, and then addressed later with a few minutes of speech from the Governors, as if it was an abstract topic which doesn’t relate to other matters being discussed.
Instead the main topic discussed was the future of money, particularly in regard to cash usage. Encouragingly, Mark Carney indicated that the Bank recognises the importance of protecting access to cash “We need to put as many people as possible in a position where they can choose the means of payment that makes most sense to them”, he said.
Eventually the topic turned to climate change, which gave me an opportunity to challenge the Bank of England on the issue, which Positive Money supporters voted as the second most pressing for the Bank right now.
I raised how the Bank of England talks a lot about the importance of considering climate risk, but fails to lead by example, and is actively subsidising fossil fuels through its own activities.
For instance, in 2016 the Bank of England undertook a round of ‘corporate quantitative easing’, in which it spent £10bn of newly created money buying up corporate bonds. But these purchases have been skewed towards buying bonds from high-carbon companies, which means that the Bank has effectively been subsidising a fossil fuel economy.
I therefore asked why the Bank of England isn’t taking the need for disclosure more seriously by disclosing the climate risks on its own balance sheet, and forcing other firms to do the same.
I felt empowered by the support of over 1000 Positive Money supporters who’d shared their views and ideas with me ahead of the meeting, and to be able to say I was representing a movement which is bigger than just one person.
Carney seemed to appreciate the polling we’d done of our supporters, but not long after I had begun speaking, he attempted to rush me and stop my explaining how the Bank of England’s policies are at odds with efforts to fight climate change, and how it is failing to promote the overall good of the people.
The response from the Governors was somewhat revealing. Carney said: “With respect to the purchases that the Bank makes, we are very conscious to make those purchases in a way that doesn’t distort the market, because if we do that we are making a political decision.”
“Climate policies are policies of government, but the market will get behind those policies”, he added.
This is a regurgitation of the myth that central banks are somehow able to operate above the realm of politics. As if not all decisions, such as the decision not to ensure that their policies support the government’s legal obligation to reduce emissions, have political influences and consequences.
Regardless, the idea that “climate policies are policies of government”, not for the Bank of England, ignores the risk that climate change poses to the stability of the financial system, which is the Bank’s job to protect. The transformation to a greener, safer finance sector won’t be possible unless the Bank takes a more proactive approach.
The Bank of England is the most powerful economic institution in the UK and yet its most senior leaders don’t recognise the power or responsibility they have to address the urgent challenges facing our society. In the words of Greg, a supporter from Sussex I’d planned to quote, the Bank is “letting people down by not using its powers to transform the financial system for the better.”
Disappointingly, I was not allowed to respond. I wanted to relay the powerful words passed to me by Positive Money supporters, the members of the public outside of the City of London which the Bank of England is supposed to serve. I wished I could have told Carney this unwillingness to listen is perhaps why, despite his having opened this event by saying the Bank of England’s “purpose is to promote the good of the people”, only 5% of the people we polled think the Bank works in their interest.
Ironically, Carney later said we need to hear from more young people, after having cut short the youngest person to have spoken so far, myself.
Afterwards I took the opportunity to speak to Mark Carney face-to-face. He apologised for his interruption, saying he didn’t want the event to be hijacked by Positive Money. I thought this was a strange thing to say about my trying to make a single contribution. I think the takeaway from this is that Positive Money is touching a nerve at the Bank, which seems a positive sign that we are having an impact.
Towards the end of the public discussion Carney had also said that in Canada “the Positive Money of its day was called social credit, which was a form of helicopter drop money in the great depression”, which he claimed “didn’t work” (this being “historical fact”).
This seemed a contentious statement for a supposedly independent central banker to make. So I questioned him on it when he spoke to me face-to-face, citing research by experts such as Josh Ryan-Collins, which found that central bank money creation succeeded in helping the Canadian economy recover from the great depression. In response, Carney confidently made a bizarre claim that public money creation was only deployed in two local provinces, and not on a significant scale.This is simply not true.
The Bank of Canada funded over two-thirds of government expenditure between 1935 and 1939. When I pointed out that such monetary financing was utilised on a large scale from 1935 to 1975, to great success, Carney claimed he knew best as he had been the Governor of the Bank of Canada. Perhaps he should have taken the time to read up on the central bank’s history.
Throughout our conversation, his words seemed a masterclass in the ‘there is no alternative’ logic associated with the political rhetoric we have heard since the crash. He made ideologically charged pronouncements, along the lines of ‘it would be nice if we could just print money to pay for everything, but nothing comes for free’. As if that is some sort of justification for how money has been created to serve the financial sector, but not the real economy and wider society.
I was frustrated with such dogmatic thinking, and an event that claimed to be about open participation but was actually controlled and in some ways contrived. I left the Bank of England that evening more convinced than ever about the importance of ensuring that the Bank of England’s mandate truly serves the real economy and wider society, rather than just financial markets, and the need for a greater diversity of thought and openness at senior levels of the central bank.