10 Years On: why has so little changed since the financial crash?

As the tenth anniversary of the collapse of Lehman Brothers approaches, the Financial Times’ chief economics commentator, Martin Wolf, argues that politicians and policymakers have simply tried to restore things to the past, instead of taking the opportunity to build a better future.

As Wolf suggests in his latest piece, the problem isn’t an absence of good ideas. He references Positive Money’s work as some of the “perfectly good” ideas which have been proposed:

“Others ask why only banks have accounts at central banks. Why should every citizen not be able to do so? Some wonder why we cannot use central banks to escape dependence on debt-fuelled growth.”

These are ideas which have been explored in some of the research papers published by Positive Money this year. In March we published ‘The Future of Cash: Protecting access to payments in the digital age’, which argued the case for a “digital cash” system, where every citizen would be given access to a risk-free account at the Bank of England. In January we launched ‘Escaping Growth Dependency: Why reforming money will reduce the need to pursue economic growth at any cost to the environment’, which advocated that governments should use public money creation in order to meet societal needs without producing an unsustainable debt burden.

Martin Wolf has been following Positive Money’s work for a number of years, and has argued in favour of our sovereign money proposals in several of his articles. At a 2014 event he said:

“I am grateful to Positive Money. They have done some very very interesting work, and I think it’s admirable and important that we have this debate on the future of the monetary and financial system.”

Wolf has been a leading critic of the failure to meaningfully reform the financial system since the last crash. As he writes in his latest article, the “financial system is much as before”:

“Concern is expressed over inequality, but little has actually been done. Policymakers have mostly failed to notice the dangerous dependence of demand on ever-rising debt. Monopoly and “zero-sum” activities are pervasive. Few question the value of the vast quantities of financial sector activity we continue to have, or recognise the risks of further big financial crises.”

He goes on to make a foreboding warning “that there is so little confidence that we could (or would) deal effectively with another big recession, let alone yet another big crisis.”

This is why Positive Money will be joining many other organisations and individuals to make the 10th anniversary of the collapse of Lehman Brothers on 15 September an opportunity to turn things around before it’s too late. We hope you will be able to join us.