After three years of activity, the QE for People campaign is transforming itself into Positive Money Europe, an organisation whose mission is to make monetary policy and the banking system support a fair, democratic and sustainable economy.
It has been a long journey since we launched the QE for People campaign three years ago. It was particularly exciting when the idea of ‘helicopter money’ received mainstream press attention and when the ECB was subsequently obliged to confirm that helicopter money is a possibility. Our efforts forced the ECB to admit that it is bound by the Paris agreement on climate change, thus opening the door to policies like green quantitative easing.
We also engaged with dozens of Members of the European Parliament and had a tangible impact on their work on the annual reports on the ECB. We spoke with hundreds of NGOs – creating a growing network of organisations and individuals who share our concerns that the ECB’s monetary policy is not aligned with society’s needs. We spoke to dozens of media outlets and even got to meet key individuals at the ECB in Frankfurt.
Our conference at the European Parliament – February 2016
We achieved a lot, but times are now changing. When we started the campaign, the ECB’s QE programme opened an opportunity for us to open up a conversation on money creation, and at a time when Europe was still suffering from austerity policies. But in 9 months from now, the European Central Bank (ECB) is expected to start phasing out quantitative easing – a difficult exercise which may cause even more problems than QE caused during its implementation. So it’s time for us to take stock of this shift and to move our campaign on so we can be more relevant and effective.
There is also another important shift in the bigger European context: the next European Parliamentary elections are due to take place in 18 months, which means an EU political recomposition is on the cards. What’s more, two thirds of executive board of the ECB is to be renewed in the coming 2 years, which provides an opportunity for bringing more open-minded people to the top leadership of the ECB.
Europe is at a crossroads. Whatever happens next with quantitative easing, there is one thing for sure: European citizens deserve a public voice to represent their interests on banking and monetary policy. Quickly after we launched the QE for People campaign, we were shocked to realize how few organisations are actually working on issues surrounding the ECB. Thus, there is a big gap to be filled. This is why we are proud to announce our next move.
Starting from today, QE for People becomes Positive Money Europe – a not-for-profit research and campaigning organisation working towards a money system which supports a fair, democratic and sustainable economy across the Eurozone. In effect, we will operate as the European branch of Positive Money, a UK non-profit which initiated and funded the QE for People campaign and made all our work possible.
In practice, this means the campaign will expand to a broader range of topics than just quantitative easing. At the same time, we will gradually phase out www.qe4people.eu and move our activities to positivemoney.eu.
Four avenues for change in Europe
So what will happen next? Let me outline four areas in which Positive Money Europe intends to make a difference in the coming months.
As the ECB plans to gradually phase out quantitative easing, our economy still remains extremely weak and fragile. Private debt – the original cause of the last financial crash – is even higher than before the crisis. New challenges are facing the ECB as they have almost exhausted their current tools. If a new crisis hit tomorrow, central banks would need new solutions. In the continuation of our work with QE for People, Positive Money Europe’s role will be to make sure that central banks can use helicopter money in order to combat the next crisis.
Secondly, it’s time to learn from 10 years of crisis and fix the pitfalls the eurozone has faced. The role of the ECB in particular during the crisis has been subject to much controversy. Because it can create money, the ECB is the most powerful institution in Europe. Yet its levels of accountability and transparency remain extremely weak. The ECB leaders are being appointed behind closed doors and with little respect to the need for a diversity of views and backgrounds to be represented. Oddly enough, while there is a now a widespread consensus that the Eurozone needs to be reformed, no one is yet discussing how to reform the Eurozone’s cornerstone institution – the ECB itself! Positive Money Europe will aim to fix that by fighting to increase the accountability of the ECB.
Thirdly, the climate change challenge is not going to fade away. Unfortunately it is not clear at all how the EU will meet its own goals to invest 180 billion euros a year. It is clear that sooner or later we will need new funding sources capable of unleashing massive investment into green infrastructure. We believe this is where central banks can help, and Positive Money Europe will continue to advocate for making central banks aligned with sustainability.
Finally, the move towards a cashless society is raising many existential questions in regards to the nature of money and the implications for central banks. In countries like Sweden, people are rapidly abandoning cash, which makes the banking sector even more powerful, as they would hold the monopoly over the whole payment system. This is why Positive Money Europe will push for the introduction of a digital euro – a public digital currency that has the same properties as physical cash – which would be issued by the ECB and allow citizens to make payments with it. In short, a digital euro would upgrade and prevent a private capture on our money system, while making sure we make the best advantages of technologies.
Admittedly, this is a big task we are taking on! We know it all too well.
But building upon our experience with the QE for People initiative and with the experience and skills of Positive Money UK, we are confident that we can positively contribute to fixing some of the Eurozone problems. And with a little help from committed citizens like you, all of this is possible!
Real economic activity is individuals making, and satisfactorily completing, voluntary exchanges of goods and/or services. Money is an exchange facilitator that is all.
Because historically, new money could not be produced when needed at points of exchange, the natural place for it to be produced, it had to be produced independent of exchanges. Money produced in this way is divorced from the reason for it’s very existence, namely the exchanges of real goods and services, and it is thus artificial. Money’s utility arises from the fact that it can serve as a universal surrogate for exchangeable goods or services, i.e. money is a Universally Exchangeable Item[UEI], and it is this surrogacy which gives money it’s power whether it is produced artificially or not.
In a cash economy money is always assumed to be a valid UEI. Historically when all money right from issuance was linked to the values in a State’s holdings of precious metals this assumption was correct. It is not correct when we are dealing with a Fiat currency. Fiat currencies are not linked from issuance to the value of anything, i.e. they are not UEIs at issuance. Their linking to real exchangeable values has to happen post issuance either legitimately or by default.
If legitimately the money system has to issue new money as debt [NMD] to an intending purchaser who must then settle the NMD by selling something of value equal to the NMD. There would have to be a Money ystem enforced lmit on the amount of NMD that any person can have any point in time. Credit cards work in exactly this way.
If by default the newly issued money is allowed to steal its value from the value represented by the pool of money already in circulation. This debases the currency and causes inflation.
Current money systems were designed to handle artificial money. This did not matter whilst the artificial money was commodity based. It does matter when the currency is a Fiat currency because then newly issued money is forced to get its value by default.
Now with the Internet, mobile phones, information technology and a digital currency new Fiat money could and should only be issued at points of purchase. The Money System would need to be changed to enforce the legitimisation of the value accorded to newly issued money. Everybody would have access to new money when they needed it, currency debasement would cease and financial bubbles and general economic instability would be a thing of the past.