PRESS STATEMENT ON SOVEREIGN MONEY CONCEPT
KEMBALI KE SENARAI MEDIA [BACK TO MEDIA LIST]
KEMBALI KE LAMAN UTAMA [BACK TO HOMEPAGE]
Nov 18th 2020
By Sdr Muhammad Zahid Abdul Aziz BA Econs (Exeter), MSc IBF (UIAM), Deputy Chairman, Movement for Monetary Justice Malaysia.
1. In Malaysia, similar to all countries in the world, our central bank BNM only creates a mere 5% of total money in the form of notes and coins.
2. 95% of money is created by banks when they give out loans or financing.
3. Contrary to popular belief banks do not lend from deposits; banks are money creators i.e. money created in the form of numbers in bank accounts or accounting entries.
4. The fact that new money is created when banks give out loans is confirmed by no less than the Bank of England, The Federal Reserve and the Bundesbank of Europe.
5. On average in the world 84% of bank loans goes to personal loans, credit cards, housing, commercial properties and the financial sector including derivatives; and only 16% goes to the real economy.
6. This creates inflation suffered most by the poor; and bubble inflation in housing suffered by the rakyat.
7. On average in the world 80% of jobs are created by the SME sector; in Malaysia 60%. Contribution to GDP is between 60% to 80%.
8. When only a small portion of bank loans goes to the SME sector; less than 3% in total on average, this creates graduates and youth unemployment. This is a worldwide phenomena suffered by all countries practicing the same monetary system. China has 2 million unemployed graduates, Indonesia and Philippines 1 million each for example.
9. There is a gross mismatch between national interest and the interest of banks in the world today. Especially so when the same banks lending, are the same banks running the payment system. People-deficient policies are extended to the banks by the government just to ensure the payment system does not fail.
10. There is now a great Reform Movement in the world to reform the Monetary System. They now form the International Movement for Monetary Reform that houses all NGO’s fighting to reform the Monetary System. They include Positive Money in the UK, Monetative in Germany and Positiva Pengar in Sweden, amongst others. Movement for Monetary Justice Malaysia or Gerakan Keadilan Monetari is the latest new member of the IMMR.
11. Monetary Reformists throughout the world is now fighting for the setting up of Sovereign Money in their nations.
12. Sovereign Money means money creation ability is removed from private banks and given to the State.
13. In Malaysia we are proposing for Money Creation to be under the direct control of Parliament.
14. We proposed banks to be divided into two streams. One, Payment Banks who handles the nation’s payment system without the ability to lend. Secondly Investing banks who invests or give financing without being involved in the Payment System. This will kill the ability of banks to create money.
15. We proposed BNM to be taken away from the Ministry of Finance and placed under the control of a Parliamentary Monetary Committee. This will avoid any possibility of abuse by the ruling government.
16.Unlike present commercial banks money creation; State Money creation will be directed wholly to the real sector creating employment and economic output denying occurrence of hyper inflation or even general inflation as wrongly surmised without much thought by certain people. In Zimbabwe the money creation is under the direct control of the President. This cannot happen in the system proposed for Malaysia.
17. Sovereign Money is supported by Financial Times’ chief economics commentator, Martin Wolf, and highlighted by former Bank of England Governor Mervyn King, former chairman of the UK’s Financial Services Authority, Lord Adair Turner, and a Vice-President of the European Central Bank, Vitor Constâncio.
18. Amongst the benefits of a Sovereign Money System are as follows:
i) More effective Monetary Policy
ii) Safe Payment System not tied to the fortunes of banks
iii) Citizen Dividends are more effective to stimulate economy than tweaking with inconsequential interest rates
iv) Narrows the poverty gap
v) Total dislocation from debts
vi) Increased financing for the real economy especially the job creating SME sector
vii) Bringing down house prices
viii) Towards a zerorised inflation society
ix) Towards a zerorised youth and graduate unemployment
x) Strengthened national economy
KEMBALI KE SENARAI MEDIA [BACK TO MEDIA LIST]
KEMBALI KE LAMAN UTAMA [BACK TO HOMEPAGE]
Dikemaskini [Updated]: Sam Ahmad 20220111