Monetary reform in Britain

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Monetary reform is the process of fundamentally changing policies regarding money. It can include changes to the money creation process, fractional-reserve banking, financial institutions, financing of the economy and social credit among other things. [1]

Contents

History

19th century

British monetary reform has historical roots in questioning the gold standard during the Industrial Revolution. The Currency School and Banking School debates of the 1840s laid groundwork for later reform movements, [2] particularly around the Bank Charter Act of 1844. [3]

Post-World War I

The economic disruptions following World War I sparked renewed interest in monetary reform. John Maynard Keynes published A Tract on Monetary Reform in 1923. [4] Unemployment, economic instability, and gold standard issues created interest in alternative economic theories. [5]

C. H. Douglas and the Social Credit-movement

C. H. Douglas, founder of the Social Credit-theory. Photo taken in Edmonton, Alberta, Canada, 1934. C H Douglas.jpg
C. H. Douglas, founder of the Social Credit-theory. Photo taken in Edmonton, Alberta, Canada, 1934.

In the years around 1920 the British engineer C. H. Douglas developed a theory on banking and welfare distribution, a theory which he called "Social Credit", and which soon became the cornerstone of an international movement with the same name. However, Douglas himself warned against viewing the Social Credit solely as a scheme for monetary reform. Personally he preferred to describe it as "the policy of a philosophy" or, to be exact, the policy of "practical Christianity". [6] This policy, linked to this philosophy, is all about dispersing economic and political power to individuals. As he once wrote, "Systems were made for men, and not men for systems, and the interest of man which is self-development, is above all systems, whether theological, political or economic." [7]

Monetarist transition (1970s-1980s)

The collapse of the Bretton Woods system led to fundamental reconsideration of monetary frameworks. [8] Milton Friedman's monetarist theories gained significant influence in British policy circles, culminating in the adoption of the Medium Term Financial Strategy under the Thatcher government.

Reform movements during this period included:

Bank of England independence movement (1990s)

After a campaign for central bank independence, [12] the Bank of England achieved operational independence in 1997 [13] with inflation targeting as the primary monetary policy framework. [14]

The independence movement involved:

Parliamentary engagement

Parliamentary commissions and reports

The Radcliffe report (1959) represented the most comprehensive parliamentary investigation into British monetary systems in the post-war era. [19] The report challenged conventional monetary theory [20] and influenced subsequent policy debates. [21]

Following the Libor scandal, the Parliamentary Commission on Banking Standards (2013) published "Changing banking for good" - a comprehensive report outlining radical banking industry reforms. [22] The Independent Commission on Banking recommended "ring fencing" retail deposits, [23] which was passed in the 2013 Financial Services (Banking Reform) Act. [24]

Recent development and debate

Michael Rowbotham's The Grip of Death, published 1998, was an attack on the banking system as well as the politics of globalization, free trade and growth-oriented strategies based on these lines. The book was widely spread and got reviews in magazines such as The Ecologist, [25] Resurgence, New Internationalist, The Tribune, The Tablet, Sustainable Economics, Permaculture Magazine, Food Magazine and Social Credit. [26] Some of the British monetary reformers, such as Michael Rowbotham, are influenced by the Social Credit-movement.

The Money Reform Party [27] [28] was founded by Anne Belsey from Kent in 2005 and deregistered in 2014. [29] Belsey stood for the MRP in the 2006 Bromley and Chislehurst by-election and came last with 33 votes. She stood in Canterbury in 2010 [30] and came last with 173 votes. Author Mark Braund recommended the MRP website "which includes a compelling explanation of the mechanics of money creation and its impact on society". [31]

2008 financial crisis

The 2008 financial crisis sparked significant renewed interest in monetary reform. Several organizations emerged or gained prominence:

Key reform proposals

Sovereign money creation

Proponents argue that money creation should be a sovereign government function rather than a private banking privilege. [34]

This would involve:

Specific policy proposals and mechanisms

Ring-fencing proposals from the Independent Commission on Banking represented significant policy development, [37] though falling short of full structural separation advocated by reform movements. [38]

Digital currency initiatives have gained attention, with the Bank of England exploring central bank digital currency options that could fundamentally alter monetary systems. [39]

A quantitative easing alternative is direct distribution to citizens rather than through financial markets. [40]

Britain has had numerous local currency initiatives from the Totnes pound [41] to time banks. [42]

Papers

See also

References

  1. ↑ For an example of the use of the term, see this contribution from Bilderberg.org
  2. ↑ The New Palgrave Dictionary of Economics. Springer. 18 May 2016. ISBN   978-1-349-58802-2.
  3. ↑ Glasner, David (16 December 2013). Business Cycles and Depressions: An Encyclopedia. Routledge. ISBN   978-1-136-54520-7.
  4. ↑ Arnon, Arie; Marcuzzo, Maria Cristina; Rosselli, Annalisa (11 February 2022). Financial Markets in Perspective: Lessons from Economic History and History of Economic Thought. Springer Nature. ISBN   978-3-030-86753-9.
  5. ↑ Youngson, A. J. (5 November 2013). Britain's Economic Growth 1920-1966. Routledge. ISBN   978-1-136-58930-0.
  6. ↑ C.H. Douglas. "The Policy of a Philosophy". Australian League of Rights. Archived from the original on 4 September 2007. Retrieved 1 March 2008.
  7. ↑ Douglas, C.H. (1974). Economic Democracy, Fifth Authorised Edition. Epsom, Surrey, England: Bloomfield Books. pp.  18. ISBN   0-904656-06-3 . Retrieved 12 November 2008.
  8. ↑ Yokokawa, Nobuharu; Yagi, Kiichiro; Uemura, Hiroyasu; Westra, Richard (14 April 2016). The Rejuvenation of Political Economy. Routledge. ISBN   978-1-317-22147-0.
  9. ↑ Needham, Duncan (9 May 2014). UK Monetary Policy from Devaluation to Thatcher, 1967-82. Springer. ISBN   978-1-137-36954-3.
  10. ↑ Booth, Alan (1995). British Economic Development Since 1945. Manchester University Press. ISBN   978-0-7190-4503-5.
  11. ↑ Coopey, Richard; Woodward, Nicholas (1 June 2025). Britain in the 1970s: The Troubled Economy. Taylor & Francis. ISBN   978-1-040-36584-7.
  12. ↑ Cobham, David (14 February 2003). The Making of Monetary Policy in the UK, 1975-2000. John Wiley & Sons. ISBN   978-0-470-85516-4.
  13. ↑ Davies, Howard; Green, David W. (12 April 2010). Banking on the Future: The Fall and Rise of Central Banking. Princeton University Press. ISBN   978-1-4008-3463-1.
  14. ↑ Matthews, Kent; Booth, Philip M. (22 February 2006). Issues in Monetary Policy: The Relationship Between Money and the Financial Markets. John Wiley & Sons. ISBN   978-0-470-03281-7.
  15. ↑ Schmidt, Vivien Ann (2002). The Futures of European Capitalism. Oxford University Press. ISBN   978-0-19-925368-5.
  16. ↑ Maman, Daniel; Rosenhek, Zeev (March 2011). The Israeli Central Bank: Political Economy, Global Logics and Local Actors. Taylor & Francis. ISBN   978-1-136-82237-7.
  17. ↑ Cobham, David (14 February 2003). The Making of Monetary Policy in the UK, 1975-2000. John Wiley & Sons. ISBN   978-0-470-85516-4.
  18. ↑ Senior, Paul; Crowther-Dowey, Chris; Long, Matt (16 December 2007). Understanding the Modernisation of Criminal Justice. McGraw-Hill Education (UK). ISBN   978-0-335-23527-8.
  19. ↑ Bonis, Riccardo De; Pozzolo, Alberto Franco (5 January 2012). The Financial Systems of Industrial Countries: Evidence from Financial Accounts. Springer Science & Business Media. ISBN   978-3-642-23111-7.
  20. ↑ Mizen, Paul (1 January 2003). Central Banking, Monetary Theory and Practice: Essays in Honour of Charles Goodhart. Edward Elgar Publishing. ISBN   978-1-78195-077-7.
  21. ↑ Wood, John Harold (6 June 2005). A History of Central Banking in Great Britain and the United States. Cambridge University Press. ISBN   978-0-521-85013-1.
  22. ↑ Macartney, Huw (12 September 2019). The Bank Culture Debate: Ethics, Values, and Financialization in Anglo-America. Oxford University Press. ISBN   978-0-19-258190-7.
  23. ↑ Ashton, James (12 March 2018). "James Ashton: Proof ring-fencing in banks is a total waste of energy". The Standard. Retrieved 10 August 2025.
  24. ↑ Díaz, Belén Díaz; Capaldi, Nicholas; Idowu, Samuel O.; Schmidpeter, René (11 May 2020). Responsible Business in a Changing World: New Management Approaches for Sustainable Development. Springer Nature. ISBN   978-3-030-36970-5.
  25. ↑ Hutchinson, Frances. "The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economics". go.gale.com. The Ecologist (Vol. 29, Issue 1). Retrieved 12 July 2025.
  26. ↑ "Michael Rowbotham: Written in Belief | Scoop News".
  27. ↑ "Money Reform Party". Archived from the original on 12 October 2016.
  28. ↑ Frisby, Dominic (18 September 2008). "The Money Reform Party". Frisby's Bulls And Bears. Retrieved 16 April 2017.
  29. ↑ "Money Reform Party". Open Electoral Commission. Retrieved 16 April 2017.
  30. ↑ "Election candidates so far for Canterbury and Whitstable". This is Kent. 16 April 2010. Retrieved 16 April 2017.
  31. ↑ "Money for nothing". The Observer. 5 April 2009. Retrieved 16 April 2017.
  32. ↑ Weber, Beat (17 May 2018). Democratizing Money?: Debating Legitimacy in Monetary Reform Proposals. Cambridge University Press. ISBN   978-1-108-17392-6.
  33. ↑ Arestis, Philip; Sawyer, Malcolm (20 October 2014). Economic Policies of the New Thinking in Economics. Routledge. ISBN   978-1-317-85049-6.
  34. ↑ Pettifor, Ann (21 February 2017). The Production of Money: How to Break the Power of Bankers. Verso Books. ISBN   978-1-78663-136-7.
  35. ↑ Stellinga, Bart; Hoog, Josta de; Riel, Arthur van; Vries, Casper de (3 June 2021). Money and Debt: The Public Role of Banks. Springer Nature. ISBN   978-3-030-70250-2.
  36. ↑ Roselli, A. (8 November 2011). Financial Structures and Regulation: A Comparison of Crises in the UK, USA and Italy. Springer. ISBN   978-0-230-34666-6.
  37. ↑ Bailey, David; Cowling, Keith; Tomlinson, Philip (2 April 2015). New Perspectives on Industrial Policy for a Modern Britain. OUP Oxford. ISBN   978-0-19-101646-2.
  38. ↑ Armour, John; Awrey, Dan; Davies, Paul; Enriques, Luca; Gordon, Jeffrey N.; Mayer, Colin; Payne, Jennifer (4 August 2016). Principles of Financial Regulation. Oxford University Press. ISBN   978-0-19-109005-9.
  39. ↑ K, Ozili, Peterson (24 July 2024). Global Developments in Central Bank Digital Currency. IGI Global. ISBN   979-8-3693-5590-9.{{cite book}}: CS1 maint: multiple names: authors list (link)
  40. ↑ Clark, David (2016). The Global Financial Crisis and Austerity: A Basic Introduction. Policy Press. ISBN   978-1-4473-3039-4.
  41. ↑ Stănescu, Cătălin-Gabriel; Gikay, Asress Adimi (28 December 2020). Discrimination, Vulnerable Consumers and Financial Inclusion: Fair Access to Financial Services and the Law. Routledge. ISBN   978-1-000-29519-1.
  42. ↑ Lukas, Valek; Vladimir, Bures (21 September 2018). Time Bank as a Complementary Economic System: Emerging Research and Opportunities: Emerging Research and Opportunities. IGI Global. ISBN   978-1-5225-6975-6.
  43. ↑ Gould, B. (16 September 2013). Myths, Politicians and Money: The Truth Behind the Free Market. Springer. ISBN   978-1-137-35863-9.
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