The Problem

Over the last decades, the global monetary and financial systems changed considerably in response to technology, (de)regulation, and globalisation. Currently, what is considered by mainstream economics the bulk of the money supply [all money in (digital) bank accounts)] is created by private banks whenever they extend credit, whereas the state or a central bank only holds a monopoly over the creation of cash (coins and banknotes), which is dwindling in proportion. The result is a system out of control, which does not work in the public interest and causes the following problems:

  • Unsustainable level of debt​: Because most money is issued as bank credit, money and debt are closely interlinked. Therefore the system is more or less dependent on continuously growing bank credit which is unsustainable.
  • Perpetual expansion: In order to service those large amounts of debt, the economy has to grow, even when markets are saturated and resources depleted (otherwise there would be recession and unemployment).
  • Unfairness, monopolistic/unbalanced structures: The power to create money gives banks an unfair and damaging advantage over all other institutions and/or actors in the economy. How much money is created and where new money is spent is primarily determined by private banks on the basis of maximizing their own profits rather than the needs of the economy. With this double power of money creation and allocation they shape society.
  • Inequality and the concentration of wealth: GDP-disproportionate growth of financial assets and debt results in a bias of the distribution of income and wealth in favour of financial income at the expense of earned income.
  • Financial instability: Money creation by banks is pro-cyclical – too much in a boom and too little in a recession, causing pronounced boom-bust cycles. Also, the banking system is inherently unstable due to the problem of bank runs and requires extensive bailouts and guarantees in a crises to prevent a general meltdown of the economy.
  • Anti-democratic: Because the government relies on commercial banks to create money, the government and the society have to borrow the money into existence and pay interest on the money supply to the banks. This means higher profits for the banks and higher taxes for the rest of us.
  • Not transparent​: When money is created by banks in connection to a loan it is not transparent to the public who is receiving the advantages of using the newly created money or how much of it there is in circulation.

Our Proposal

Current money systems are not fit-for-purpose and need updating to provide stability and fairness to serve the goals of democratic societies. Therefore what is needed in lieu of the present bank money system is a sovereign money system in which:

  • All official money – be it cash, money-on-account or new forms of digital currency – is created by a monetary state authority such as the state-owned central bank, according to the needs of the economy in a transparent and accountable process.
  • Money is created free of debt, in that it is directly spent into the economy via the state by way of government expenditure or directly distributed to the citizens as an equal dividend.
  • Private banks can not create official money (national currencies) as credit. They only act as payment service providers and/or financial intermediaries by lending and investing already existing official money, which they obtain from savers and investors.

While this is our long term vision, we are supportive of various ideas, strategies and monetary proposals to move towards this goal such as central bank digital currencies or quantitative easing for people (QEP).

About the IMMR

The IMMR is an international/supranational coalition of nonprofit organisations from across the world, campaigning for a monetary system that serves society. We maintain a very clear and specific aim, namely to change the way money is created, but we are not dogmatic about the way our proposal is implemented as the details will vary from country to country. To serve this goal, the IMMR supports and connects various national member organisations to share ideas, discuss research and exchange best practices. United in a global movement for monetary reform we look forward to the day when the money systems are finally pillars of society in service of stability and prosperity.