PRESS RELEASE: Positive Money responds to Bank of England COVID-19 emergency response

Positive Money has questioned the Bank of England’s plans to pump money into the economy through the new Covid Corporate Financing Facility (CCFF), and called for newly created money to instead go to people directly.

Responding to reports that the BoE governor Andrew Bailey has pledged to create potentially unlimited amounts of new money through the CCFF, Fran Boait, executive director of Positive Money, said:

“It is positive that the government and the Bank of England are working together and utilising the central bank’s ability to create new money as a tool to respond to the economic and public health emergency.

“However there are serious questions over whether the new Covid Corporate Financing Facility (CCFF) is the best use of newly created money. Any economic response to COVID-19 must prioritise protecting the most vulnerable and reducing the spread of the virus, and the measures announced so far do not do this. Simply pumping new money to businesses won’t stop people who are sick or at risk needing to go to work, and there is no guarantee that these businesses won’t lay workers off.

“This use of new money to buy up debt from top companies gives the impression that the government and central bank are prioritising bailing out big business rather than workers. If the Bank of England is creating new money, it must go directly to people to allow them to make ends meet without putting themselves and others at risk. We should have QE for people, not just for big business and financial markets.”

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Notes

1. The Bank of England and Treasury announced the Covid Corporate Financing Facility (CCFF) on Tuesday evening, which involves the Bank of England creating new money to buy short-term debt from businesses which had an investment-grade credit rating or similar pre-crisis https://www.bankofengland.co.uk/-/media/boe/files/letter/2020/letter-from-the-governor-to-the-chancellor-march-2020.pdf?la=en&hash=31274FBF31E982B78F8793A8DBBC98707C9FE251

2. Andrew Bailey today told journalists that the BoE is willing to pump ‘unlimited’ money into the financial system through the CCFF https://www.ft.com/content/5919c6fb-1f5f-315d-8353-94f04afcf340

3. Positive Money has been a leading critic of the BoE’s quantitative easing programme (QE), and has instead called for ‘QE for People’, in which central bank money creation would instead be used to directly benefit the public. Forms of QE for People such as ‘helicopter money’, which involves all citizens directly receiving an equal sum of newly created money, could be used to help households stay afloat during the coronavirus crisis. https://positivemoney.org/2016/04/our-new-guide-to-public-money-creation/

4. Positive Money campaigns for a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company fun/ded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org

5. For any questions or to book a spokesperson please contact simon.youel@positivemoney.org.uk or 07817765517