September 2018 Release of our petition to have the Reserve Bank issue our money along with an opinion piece.

June Press release on the swiss referendum. Despite the campaign of confusion and fear run by opponents, 25% voted for the Sovereign Money Initiative.

April The AustralianRoyal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is coming up with some serious wrongdoing by the banks and financial institutions

May 2017 Positive Money New Zealand issued a press release seeking clarity from the Reserve Bank on how our money is created. They still refer to intermediation by the banks, which is not how our banking system works.

5th November 2016 An article in The Guardian newspaper in England argued that abolishing debt-based currency holds the secret to getting our system off its addiction to growth.

5th September 2016 KPMG released a report, commissioned by the Prime Minister of Iceland, titled "Money Issuance" The report looked at money created by the Government.

28 March 2016 Bryan Gould agreed to be our Patron. Bryan is a respected commentator on economic matters, an author, academic and Companion of the New Zealand Order of Merit.

14 October 2015 The Finance Commission of the Dutch parliament discussed monetary reform.

22 November. The British parliament debated money creation last week, for the first time in 170 years. There was cross-party support for a proposal to set up a monetary commission

23 September. A new generation of young people, dubbed ''property orphans'' may be destined to be renters for life.

17 September. The Bank of International Settlements (BIS), the bank used by central banks, confirmed New Zealand houses are among the most "unaffordable" in the world compared to people's incomes.

25th April 2014 "Strip private banks of their power to create money": says the Financial Times' chief economics commentator Martin Wolf, who endorses Positive Money's proposals for reform

15th March 2014 - In a historic move The Bank of England quarterly bulletin explains how money is created. Whenever a bank makes a loan, it creates a deposit in the borrower's bank account, thereby creating new money. The bank says that this differs from the story found in some economics textbooks.

16th August 2013. The retiring head of the Financial Markets Authority apologised for the mistakes made saying "You were let down".


Reginald McKenna“I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.”

Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924.


The Rules of Money

Under the current banking system, there are three 'rules of money':

  1. When a bank makes a loan, it increases the amount of money in the hands of the public (by increasing the total quantity of digital bank deposits)
  2. When a member of the public repays a loan, it reduces the amount of money in the hands of the public (by decreasing the total quantity of digital bank deposits)
  3. When a member of the public pays interest on their loan at least part of that interest must involve the creation of additional new debt somewhere in the productive economy

Consequently, through excessive lending between 2000 and 2008, banks were able to double the money supply in just 8 years - an increase in the total money supply from $83 billion to $165 billion.

September 2008 signalled the start of the recession following the collapse of United States banks and this is reflected below in the money supply figures for the years 2008 – 2010. The chart below shows the increase in the Reserve Bank’s M3 measure of money supply, and therefore the total quantity of bank deposits, in each year.

All the money in your bank account represents someone else’s debt

Since all the number money in your account was created by banks making loans, this means that for every dollar in your bank account, someone else is in debt by an equal amount.

In fact, due to compound interest, the public’s debts are now greater than all the money that exists in the economy. According to Reserve Bank figures, if the NZ public collectively took all the money in our bank accounts and used it to pay down our debts, we would end up with no money at all.

In other words, we now have a debt-based money supply issued entirely by private, profit-seeking companies. Our money supply has been effectively privatised.

The damaging effects of this system to the economy and society are numerous and severe, and are covered in more detail further on.

Implications of the current banking system


There are two important implications of our current banking system that affect everything that happens in our economy and society:

  1. Australian banks have the power to shape New Zealand’s economy through their monopoly on the supply of money to the public and to businesses. Under the current system property carries a lower risk weighting than business lending. This leads to housing price bubbles. So the failure is caused by the financial system structure and poor government policy and regulation. If banks invest wisely in productive businesses, they can help the economy to grow, but if they choose to pump the money (bank deposits)  that they create into housing and commercial real estate, we get destabilising asset price bubbles and a severe financial crisis. Should we entrust this huge power and responsibility to an industry concerned solely with short term profit, rather than the health of the wider economy?
  2. As the sole suppliers of money to the public, if banks lend, the economy functions. If they don’t, it contracts (as in every credit crunch). Our economy is completely without a stable, permanent money supply.

Who set the rules?

Without knowledge to the contrary, the general public assumes that banks only lend money that has been deposited with them. The general public has absolutely no idea that a very large proportion of banks’ deposits has actually been created out of thin air by the banks themselves. The banks have never made any effort to correct this misconception.

Many of those people who are aware of the current system are angry at the banks, but they are not doing anything illegal.  The truth is that it is the government that sets the 'rules of play', and successive governments have failed to modernise the banking system.

Instead, after every crisis, the government and authorities focus on getting back to business as usual. They focus on 'getting banks lending again' without questioning why we are all so dependent on bank debt to keep the economy functioning.

Successive governments have repeatedly failed to fix the banking system, but the pressing concern is to do something about it.

But we also need to make sure that they don't make the same mistake again. We need to make sure everyone understands how the banking system really works, how money is created, and how we can fix the system.

As a consequence of the need to rebuild Christchurch after the devastating earthquakes, combined with the huge expenditure the nation faces to fix the “leaky home crisis”, our need to fix the banking system has never been greater. 




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