Nationalising money creation

Hopefully tomorrow I shall be proposing a motion at Green Party conference. The motion is radical and controversial, it amends our detailed Manifesto for a Sustainable Society. It has had two hefty challenges to get through so far at conference and seems to have passed the test. As long as conference doesn't run out of time it will be discussed in full in a plenary tomorrow afternoon.

It is not perfect (no motion or policy ever is), and given the discussions of the weekend so far I have some great ideas on how to improve it.

This conferences notes with concern the recent developments of financial crises involving the 'credit crunch' due to accumulating debts and the exclusive dependence on debt to maintain output and employment within the economy.

This situation arises from the undue influence that the creation of such debt places on the banking and financial sector. This conference further notes that the amount of money created by the state has now reduced to around 3% of Sterling M4, and that this proportion has fallen from around 40% in the immediate post-war years. A return to the proportions of state seignorage prevailing in that period would be a means of reducing the dependency upon debt to maintain economic activity.

Delete and replace EC662 with:

EC662 The current banking system enables commercial banks and financial institutions to exert an unacceptably large influence on the economy as a whole due to their virtual monopoly on money creation. These commercial banking institutions work to a purely commercial agenda in which the desirability of making loans is assessed only in terms of its financial viability to the lenders. The proportion of state seignorage will be increased to 40% to bring it in line with post-war years enabling a greater ability to diret money as required in EC661 and to give greater financial stability to the economy.

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EC661 The emphasis in monetary policy will be to control and redirect the creation of money towards socially and environmentally sound areas of the economy, and away from unsustainable and consumption-driven areas.

EC662 The current banking system enables commercial banks and financial institutions to exert an unacceptably large influence on the economy as a whole. These commercial banking institutions work to a purely commercial agenda in which the desirability of making loans is assessed only in terms of its financial viability to the lenders.

EC663 The banking system should be largely brought under democratic control, preferably at a local level. This will allow the process to work in the best interests of the community as a whole, rather than principally in the interests of commercial banks and their shareholders.

EC664 The Bank of England will continue to be the institution for the regulation of the national currency and the setting of base interest rates. However, it will not focus on narrow economic indicators such as the rate of inflation, but instead will take a broader view on the impact of its decisions on the economy as a whole. Final decisions on the setting of base interest rates will be made by a democratically accountable committee made up of representatives selected from the different regions of the country.

EC665 In order to help bring about the democratisation of the banking system, and in pursuit of our policies to support the growth of local economies, a network of local Community Banks will be established. These will be democratically accountable non-profit-making trusts, which will be able to provide low-cost finance both at district and regional levels. Any operating surplus arising from these Community Banks will be reinvested in their local communities. Community Banks will be empowered to create credit in the same way that commercial banks currently do, and will be given favourable conditions for doing so by the central bank. They will also be able to create their own local currencies, to operate alongside the national currency, where this is supported by the local community.

EC666 In order to bring about a more socially equitable society, it is important that poorer citizens have access to affordable credit, which can give them an opportunity to increase their basic living standards. Alongside Community Banks, measures to help facilitate this will include the promotion and support of credit unions and micro-credit schemes in which small groups of people cooperate to provide guaranteed small loans to each other.