Will Green Party in Ireland pass full reserve banking motion?

After the Green Parties of England and Wales adopted a monetary policy very similar to Positive Money’s proposals, our sister organisation in Ireland “Sensible Money” has approached the Green Party in Ireland about following suit. Details of the UK Greens revised policy are available here.

From Paul Ferguson, Sebnsible Money:

We met various people involved in the Green Party in Ireland about adopting our proposed system of Full Reserve Banking as their policy. It has been proposed as a motion and will be voted on at their AGM tomorrow, Saturday 8thMarch at 10:15 in The Hilton Hotel, Charlemont Place, Dublin 2.

The motion of major importance to us is motion 4 which reads:

Motion 4 – Full Reserve Banking

Proposer: Dublin Bay North

The Green Party supports ‘Full Reserve Banking’ as a reform to the current monetary system

Explanation

This is a proposal to take the power to create money from private banks and give it to central banks. It has been adopted as policy by the Green Party in the UK and in the US.

At present, money in Ireland is created by banks as elsewhere in the EU. The popular perception is that it is Central Banks who control the money supply but this is only true for physical notes and coins. In fact 97% of the money in circulation is in account balances which are created at will by private banks. Current monetary regulations place little effective restraint on this money creation with the result that banks can issue as much money as they want through lending and profit on the interest differential between what they charge on loans and what they receive on deposits. In the run up to the Financial Crisis, banks lent far too much and now in the aftermath they are lending far too little.

Full Reserve Banking would remove from banks the ability to issue money and place it with a Central Bank like monetary authority. If money creation was thus government controlled, this would result in significant revenues for the government, freeing up funds for reduced taxes or increased government services. Money in current accounts in banks would be 100% safe even if a bank were to fail as all current account money would be held by banks at the Central Bank. No interest would be paid though, so to earn interest savers would have to open fixed term deposit accounts, which banks would lend to businesses and households. As the money supply would be controlled centrally, there would be no large fluctuations in it, greatly smoothing the business cycle. This idea was first proposed in the Great Depression of the 1930s but was opposed by private banks.

In practice Ireland could not adopt Full Reserve Banking alone. We would require the Eurozone countries to adopt this proposal en masse. However, Full Reserve Banking has been adopted as official Green policy by the UK and US greens and we feel it should be adopted as an aspirational policy by the Irish Green Party.

For more details, see https://bsd.wpengine.com/

If you are a member of the Green Party or know anyone who is please let them know of the merits of passing motion 4.