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Open Access 2021 | Open Access | Buch | 1. Auflage

Money and Debt: The Public Role of Banks

verfasst von: Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

Verlag: Springer International Publishing

Buchreihe : Research for Policy

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

Inhaltsverzeichnis

Über dieses Buch

This Open Access book from the Netherlands Scientific Council for Government Policy explains how money creation and banking works, describes the main problems of the current monetary and financial system and discusses several reform options. This book systematically evaluates proposals for fundamental monetary reform, including ideas to separate money and credit by breaking up banks, introducing a central bank digital currency, and introducing public payment banks. By drawing on these plans, the authors suggest several concrete reforms to the current banking system with the aim to ensure that the monetary system remains stable, contributes to the Dutch economy, fairly distributes benefits, costs and risks, and enjoys public legitimacy. This systematic approach, and the accessible way in which the book is written, allows specialized and non-specialised readers to understand the intricacies of money, banking, monetary reform and financial innovation, far beyond the Dutch context.

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Inhaltsverzeichnis

Frontmatter

Open Access

Chapter 1. Introduction

Abstract

This book is a translation and adaption of the Dutch report ‘Geld en schuld. De publieke rol van banken’, published by the Netherlands Scientific Council for Government Policy (WRR). This report was the result of a formal request by the Dutch Minister of Finance for an advice on the functioning of the monetary system, as suggested in a motion adopted by the Dutch Parliament during a debate on money creation. In this introductory chapter, we first briefly introduce money and debt before discussing the role of trust and dynamism in the financial monetary system. The introduction ends with an overview of the book.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 2. How Is Money Created?

Abstract

This chapter describes how money is created. Many people mistakenly believe that money can only be created by governments or central banks. But money today is mostly – but not exclusively – created by commercial banks. This chapter describes the ways in which this is done, it outlines the forces that drive and constrain this means of money creation, and it discusses the role of monetary policy.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 3. The History of Money Creation

Abstract

The dominance of deposit money means commercial banks play a leading role in money creation. This chapter puts this situation in a historical context. The functioning of our financial monetary system and the role of banks have changed fundamentally over time. The chapter reveals that what we take for granted today was often far from self-evident yesterday. We focus on the Netherlands and discuss four periods in turn: (1) the ‘long nineteenth century’ up to the First World War, with an emphasis on the 1870−1914 period, (2) the interwar period (1918−1939), (3) the Bretton Woods period (1944−1973) and (4) the decades leading up to the latest financial crisis (1973−2008).

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 4. An Appraisal of the Financial Monetary System

Abstract

This chapter assesses the financial monetary system on the basis of four characteristics: (1) its economic contribution; (2) its stability; (3) its fairness in the distribution of benefits, costs and risks; and (4) its legitimacy. Based on this analysis, we highlight key problems in the current system. Our analysis points to two underlying problems: the unbalanced and uncontrolled growth of money and debt; and a distorted balance between public and private interests.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 5. How Does the Sovereign Money System Work?

Abstract

This chapter addresses the broad outlines of a sovereign money system as advocated in recent proposals. In such a system, money can only be created by the central bank, and the institutions that lend money (we call them financing institutions) are strictly separated from those that make up the payment system. We do not delve into the details of each proposal but focus on their overarching characteristics. We first outline what these proposals imply for the payment system as well as for investing and lending. We then turn to the government’s role and responsibilities in the new system, including how money is created and enters society, and discuss transition paths to the new system.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 6. Advantages and Disadvantages of the Sovereign Money System

Abstract

This chapter considers the advantages and disadvantages of the sovereign money system. It is structured following the four goals of any well-functioning financial monetary system that we identified in Chap. 4: its contribution to the economy; stability; fairness in the distribution of costs, benefits and risks; and legitimacy. We also address issues related to the international dimension, the transition, and system dynamics and innovation.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 7. Policies to Restore the Balance in the Current System

Abstract

In this book we identify two key challenges: we need a more balanced and controlled growth of money and debt as well as a better balance between public and private interests. This chapter focuses on the policy steps that can be taken to bring this about. We discuss measures taken since the crisis as well as measures that have been proposed but were not implemented.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Open Access

Chapter 8. Conclusions and Recommendations

Abstract

In this final chapter we discuss the book’s key findings. We first recap the operations of our current system and the problems it presents. We then discuss how the alternative of sovereign money would work and whether switching systems would be desirable. Finally, we consider what steps can be taken to address the major problems posed by the current system. We recommend restoring the balanced growth of credit and debt, and striking a better balance between public and private interests. This entails fostering greater diversity in the financial sector, curbing the excessive growth of debt, being prepared for the next crisis, and anchoring the public dimension of the banking system.

Bart Stellinga, Josta de Hoog, Arthur van Riel, Casper de Vries

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Backmatter

Titel: Money and Debt: The Public Role of Banks
verfasst von: Bart Stellinga
Josta de Hoog
Arthur van Riel
Casper de Vries
Copyright-Jahr: 2021
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-70250-2
Print ISBN: 978-3-030-70249-6
DOI: https://doi.org/10.1007/978-3-030-70250-2

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