The Case for Sovereign Money
What it is, why it is overdue, and how it is feasible
Sovereign money is legal tender issued by the national central banks, or the ECB in the euro area. The counterpart to sovereign money is bankmoney, i.e. demand deposits on current bank account, which dominate the present monetary system to an extent that justifies speaking of a bankmoney regime.
The present system of fractional reserve banking is the root cause of many financial problems. The final answer to unstable finances and unsafe bankmoney boils down to moving from the current bankmoney regime to a sovereign money system.
This article explains the problem-ridden interplay between sovereign money, bankmoney, and additional new types of money, explains what a sovereign money system looks like, why it is overdue, and in which ways it is feasible.
Continue > or download as a PDF >
• Miguel A. Fernández Ordónez - Governor of the Bank of Spain and member of the ECB's Governing Council from 2006 to 2012 - gave a remarkable speech on > El Futuro de la Banca: Dinero Seguro y Desregulación del Sistema Financiero, in which he speaks out in favour of sovereign money reform.
• Sovereign Money. An Introduction, by Ben Dyson, Graham Hodgson and Frank van Lerven, Positive Money, London.
• Creating a Sovereign Monetary System von Positive Money, London.
• Towards a Twenty First Century Monetary System, Submission to the Independent Commission on Banking, by Ben Dyson (Positive Money), Tony Greenham, Josh Ryan-Collins (New Economics Foundation) and Richard A. Werner (University of Southhampton)
• Explaining Monetary Reform - Presenting the American Monetary Act, brochure by Stephen Zarlenga, American Monetary Institute.
• U.S. Congressman Kucinich’s Historic Monetary Reform Bill HR 2990 >
• Andy Anderson & Ron Morrison on introducing a sovereign currency, the Scotmerk, in Scotland > Moving On.
• Richard C Cook > Monetary Reform and How a National Monetary System Should Work, Global Research, 11 May 2007.
Referendum on Sovereign Money in Switzerland Continue reading >
• Emma Dawnay, campaigner for the Swiss referendum, explains in an > interview with the Cobden Centre why the present money system is in need of overhaul and what sovereign money reform in Switzerland is about.
• English-language media coverage prior to the vote, by Emma Dawney
• Why the Swiss should vote for 'Vollgeld', by Martin Wolf, Financial Times, June 5, 2018.
• A Vote to Upend Banking as We Kow it, by Brian Blackstone, Wall Street Journal, June 1, 2018.
• Shake your money makers. Reshaping banking, The Economist, Feb 27, 2016.
The final outcome > 25 Yes : 75 No. A respectable result despite all fake news and scaremongering, with partly remarkable differences between urban and rural voting districts. For example, Geneva voted over 40% Yes, while rural Yes votes often were only about 10%.
How to make sense of the No vote? when voters indicate to think Yes?
In contrast to the voting result, the Swiss give rather different opinions in represenative surveys, the last one immediately after the vote: 60% think that all of the money in fact does comes the National Bank, 80% say it definitely ought to be so, while only 10% deem it acceptable that banks create bankmoney of their own as they do. Quite enigmatic…
Some original sources on full sovereign money reform
• Introduction and summary of Creating New Money. A Monetary Reform for the Information Age by James Robertson and Joseph Huber, New Economics Foundation London, 2000.
• Another document on this by J. Huber > Plain Money. A Proposal for Supplying the Nations with the Necessary Means in a Modern Monetary System, 1999.
• Here is how James Robertson introduced the subject in his Alternative Mansion House Speech, London, June 2000.
• Here is how Joseph Huber presented the subject in a paper given at the Forum for Stable Currencies, House of Lords, June 2001 > Seigniorage Reform and Plain Money.
Miguel A. Fernández Ordóñez, former Governor of Bank of Spain, is now in favour of sovereign money creation by central banks rather than bankmoney creation by commercial banks.
'Managing an economy's money is among the most important tasks of the government'.
Free exchange, The Economist, Dec 3rd 2016
Par Christian Gomez (économiste et ancien banquier d’investissement) et Bertrand Munier (professeur émérite de l’IAE de la Sorbonne):
Pour une révision monétaire radicale
Les Echos, le 9 avr. 2020.
Implementing Sovereign Money
Prof Joseph Huber. Em Chair of Economic Sociology, Martin Luther University, Germany, provides an overview of how a sovereign money system would be implemented.
Jamie Walton, American Monetary Institute, explains how the transition from bankmoney to sovereign money would be made in the US. - Registered at the 12th AMI Monetary Reform Conference, Chicago.
Stephen Zarlenga, American Monetary Institute, in one of his last presentations on monetary reform in the United States