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Positive Money
Not-for-profit advocacy group From Wikipedia, the free encyclopedia
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Positive Money UK is a not-for-profit advocacy group based in London and Brussels that campaigns for monetary reform.[1][2] Founded in 2010, the organization promotes central bank reforms and alternative monetary policy,[3] with a focus on what it terms "sovereign money" systems.[4]
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History
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Positive Money was founded in London by Ben Dyson in 2010[5] as a response to the 2008 financial crisis. In its early years, Positive Money focused its efforts in advocating for a fundamental reform of the United Kingdom's monetary system,[6] focusing on how money is created in the economy.[7]
Early work centered on education about fractional-reserve banking[8][9] and disconnecting private banks from money creation.[10] Dyson criticized the banking sector's role in housing unaffordability,[11] with financial instability leading to inequality.[12]
In 2013, Fran Boait became executive director,[13] marking a significant shift in the organisation's approach. Under Boait's leadership, Positive Money broadened its scope beyond fundamental monetary reform to include pragmatic policy proposals. These include advocacy for digital currencies, monetary financing proposals such as "People's Quantitative Easing" and "helicopter money", and environmental use of monetary policy through "green quantitative easing".
Positive Money stated that QE was ineffective in boosting GDP.[14] Positive Money also adopted new tactics such as rallies in front of the Bank of England[15] and petitioning. In 2013, Positive Money initiated the International Movement for Monetary Reform, a worldwide network of likeminded organisations.[16]
In 2015, Positive money started its international expansion by launching a Eurozone-wide campaign on "Quantitative Easing for the People".[17][18] Positive money registered as a lobby group in the EU institutions in Brussels[19] and in 2018 it formally created Positive Money Europe[20] to operate the group's campaigns towards the European Central Bank and the European Parliament. In December 2019, Positive Money Europe was able to meet with the ECB President Christine Lagarde.[21]
In 2016 Positive money founder Ben Dyson joined the Bank of England as a researcher, and he continued to work on Central Bank Digital Currency.[22]
In early 2021, Positive Money claimed a major policy victory when the Bank of England announced it would incorporate environmental considerations in its corporate quantitative easing programme, aligning with Positive Money's advocacy for "green monetary policy."[23][24]
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Proposals
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Sovereign money
Positive Money's historical backbone proposal is to introduce a "sovereign money system".[25][26] Under such a reform, private banks would be deprived from their ability to create money by extending credit into the economy.[27] In turn, the Bank of England would regain the monopoly over money creation,[28][29] by financing the government's budget (monetary financing) or distributing a citizens' dividend ("helicopter money").[30] While some Positive Money advocates also endorse Modern Monetary Theory, MMT claims that money is already issued as sovereign currency.[31]
Although Positive Money's proposal is similar to full-reserve banking[32] or narrow banking, it differs in the sense that it would merge bank deposits and central bank money. As explained by former Positive Money researcher Frank van Lerven, "Under a Sovereign Money system, there is no longer a split circulation of money, just one integrated quantity of money circulating among banks and non-banks alike."[33] According to former ECB Vice-president Vitor Constancio, Positive Money's proposal "would not create enough funding for investment and growth."[34]
Other proposals
Over the years, Positive Money has broadened its agenda towards somewhat more short-term proposals such as:
- Fiscal-monetary cooperation: the organisation proposes various ways to channel money created by central banks towards public spending and investment.
- Reforming the governance and accountability frameworks of the Bank of England[35] and of the European Central Bank.[36]
- Greening monetary policy: Aligning monetary policy with climate change objectives[37][38][39] though reforms of central bank's collateral framework or forms of credit guidance such as green TLTROs.[40][41]
- Digital currency: the organisation propose implementing a central bank digital currency[42] in the UK and supports the introduction of a digital euro by the ECB.[43]
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Reception and criticism
Positive Money's proposals created significant debate in financial, academic, and policy communities. Supporters argue the proposals address fundamental flaws in the monetary system that contribute to financial instability, income inequality, and unsustainable energy production.[44]
Critics raise concerns about sovereign money systems. Mainstream economists argue removing banks' money creation could constrain credit and investment. Critics also claim it could stimulate expansion of shadow banking.[45]
The organization's more pragmatic proposals received broader support and central banks have partially adopted green monetary policy.[46]
See also
References
External links
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