In any economy there must be someone with the power and authority to create money. This power historically sat with the king and the Royal Mint, until it was transferred to state control under the Bank of England. But now the power to create money sits ultimately with commercial banks, which create new bank deposits as they make loans. These deposits make up 97% of the UK money supply.
Neither profit-seeking bankers nor vote-seeking politicians can be trusted with the power to create money
Jeremy Warner claims in his Telegraph article "Bankers have done a good job of creating money" from 2nd May 2014 that transferring the power to create new money from banks to the state would mean that "politicians can print money to their hearts’ content":
It's been a busy week for journalists and economists criticising our proposals without bothering to a) read them or b) understand them. Jeremy Warner in the Telegraph claims we're in favour of allowing politicians to "print money to their hearts' content", when we've clearly stated that we wouldn't trust politicians to be responsible with the power to create money than we would trust banks. But John Aziz's blog in The Week is this week's worst offender for inaccuracies and misconceptions.
Paul Krugman, the Nobel-prize* winning economist has written a commentary on Martin Wolf's article "Strip banks of their power to create money", in which Wolf advocates the policies that I and my co-author Andrew Jackson proposed in Modernising Money.
“Strip private banks of their power to create money”: Financial Times’ Martin Wolf endorses Positive Money’s proposals for reform
Positive Money's proposals have just been advocated by Martin Wolf, the chief economics commentator at the Financial Times, in an article entitled "Strip private banks of their power to create money":