Bank of England embraces monetary financing: Positive Money response

Responding to the news that the Bank of England will be directly financing government spending through the Ways and Means facility, Fran Boait, executive director of Positive Money said:

“It is welcome that the Bank of England is using its power to create money to directly finance government spending, after denying that such a tool was on the table.

“Direct monetary financing allows the government to deliver the necessary spending to save lives, while reassuring the public that they will not be overburdened with future debt repayments. It also ensures that the Treasury has access to funding even if government debt markets are disrupted, as we have seen signs of during the coronavirus crisis.

“This use of direct monetary financing demonstrates once and for all that the government does not depend on the market to finance its spending. Hopefully now we can have an honest debate about how our collective resources should be allocated.”

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Notes

1. The Bank of England’s decision to extend the size of its Ways and Means facility comes just days after governor Andrew Bailey denied that the Bank was going to do monetary financing: https://www.ft.com/content/3a33c7fe-75a6-11ea-95fe-fcd274e920ca

2. Positive Money has been calling for the Bank of England to commit to direct monetary financing: https://positivemoney.org/2020/03/to-help-fight-covid-19-the-bank-of-england-must-commit-to-direct-monetary-financing/

3. For any questions or for interviews with a spokesperson please contact simon.youel@positivemoney.org.uk or 07817765517

About Positive Money

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 funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org