Wednesday 13 May 2015
TL;DR: the UK Green Party’s policy on money creation is an interesting one, and opens a conversation about the nature of money and who its custodians are.
Today’s post comes courtesy of the folks at NXTer.org, with this article on money creation, Subsidiarity and the Common Good.
Even if you live outside the UK, it’s hard to miss the fact that we just had a General Election here. It was a fairly unpleasant contest – when the outlook is as messy as it was, there are few incentives to hold back on the mud-slinging. In the event, a surprise victory for the Conservatives left not just politicians but a lot of pollsters contemplating their futures.
Read also: The case for bitcoin
One of the most interesting policies, from a crypto perspective, was tucked away in the Greens’ manifesto. It noted the fact that, although the Bank of England – the UK’s Central Bank – does play a role in money creation, it’s not quite what most people think. The BoE is responsible for physical cash creation, or coins and notes. It also creates central bank deposits, a kind of special IOU used exclusively to shuffle money around the banking system, which ordinary folk never get to see or use. But the vast majority of money, some 97%, is actually created by private-sector banks in the process of giving loans to customers.
The Greens: a new way of creating money?
The Green party contend that money creation is far too important to be left to the profit-driven private sector, with its murky motives and moral hazards, and that a new state-funded organisation with day-to-day autonomy from the government should have that responsibility. That is a kind of centralisation that you wouldn’t normally associate with the Greens, whose policies otherwise embody the idea of Subsidiarity and the Common Good (both oddly reminiscent of Catholic Social Teaching).
The Nxt-focused magazine NXTer.org unpacks this issue in some detail, exploring the potential implications, similarities and differences in what the Greens propose and the way we typically do things in crypto. You can read the whole thing here.
The site’s worth a wider look around, if you have the time and inclination. Nxt is a powerful second-generation cryptocurrency that brings far more to the table than simply being able to send money from A to B. Its ecosystem is a hive of activity, and the NXTer magazine does a pretty reasonable job at capturing a good fraction of the initiatives going on there. In the coming weeks I’ll be looking at Nxt and a number of the many and varied projects going on within it.