El Mundo, Spain’s largest digital newspaper, published an article on positive money after an interview with Ben Dyson on 27th July 2014.
Here’s the translation:
Where does money come from? The simplest explanation is as follows: 3% of the money in circulation are tangible notes and coins, hard cash issued by the central banks, whereas the remaining 97% is electronic money ‘created’ by commercial banks when they make loans.
“Most people have a blurry or wrong idea about how money is created”, warns British Ben Dyson, the founder of Positive Money. “Many people are surprised when they find out that the majority of the money is not created by the state, but by commercial banks and out of nothing, when they grant loans which appear as an accounting entry.
“It is there where lies the real root of the financial crisis”, Dyson states. “The origin of money is debt, personal and collective, that we will have to pay with interests sooner or later”.
Dyson, 29 years old, is rebelling against this idea of ‘negative money’. He started writing his sharp analysis on the monetary system while studying Economics and Development. His popular blog has led to establishing Positive Money in 2010, the non-profit organization that advocates radical change in the way money is created.
“The underlying problem is that money has been privatized by stealth”, claims Dyson. “It is without doubt the largest privatization in history, but we have hardly noticed it. And as long as the system continues functioning this way, as long as the commercial banks are allowed to keep creating money out of nothing (even if they meet the regulatory limits in terms of capital and reserve requirements), problems will keep piling up.
The high levels of personal and public debt, the speculative bubbles, the financial instability, the economic inequality or the cuts on public services are, according to Dyson, the price we all have to pay for the ‘negative’ origin of money, hence his determination to change the situation.
Where would the ‘positive’ money come from? Commercial banks would lose the ‘power’ to create money. A hypothetical Public Money Act would hand back this power exclusively to the central bank, through a democratic and transparent system. A A Money Creation Committee would beestablished (politically independent and neutral, like the Monetary Policy Committee today). And money would be created ‘debt free’, to stimulate real economy and not to feed financial bubbles.
Bend Dyson and Andrew Jackson have outlined this vision in “Modernizing Money, Why our monetary system is broken and how it can be fixed”. Both certainly know that this proposal is too radical given the times in which we live, now that banks are ‘untouchable’ again and the politicians cling to old recipes.
“The major parties have not rung our doorbell yet, but we are awakening the interest of economists and experts” affirms Dyson, mentioning the recent calls of the Financial Times’ analyst Martin Wolf to “strip private banks of their power to create money”.
Positive Money has 30,000 followers in the UK so far and has built networks with over twenty similar organizations across the world, including Spain, to raise awareness about monetary system problems and to reclaim “the power to create money for the public interest and in a democratic, transparent and accountable way”.
“Digital and social currencies are helping as an incentive, but they will be complementary in any case” Dyson says. “Most people will keep using the ‘central’ currency, in its present-day coins and notes form or with advanced payment systems via mobile”.
“What we need is nothing less than an updated Bank Charter Act like the one passed in the UK in 1844”, concludes Positive Money founder. “That act took the power to issue notes from the banks and gave it to the The Bank of England. The new act would serve to do the same with electronic money. Nothing more, nothing less”.