While American public banking advocates are raising eyebrows at Janet Yellen's admission that, in certain circumstances, the Federal Reserve can implement "helicopter money" (and the mainstream media's eyes become like saucers), the European Central Bank, shaken like the rest of Europe at the prospects of losing a member, is under pressure to give money out to working people and community-level enterprise rather than to the elites.
Financial Times is behind a paywall (naturally), but thanks to German EU parliamentarian Fabio De Masi, later relayed by Positive Money, we know that voices in the EU are telling the European Central Bank that the region needs quantitative easing for the people, not austerity for the working class and bailouts and bail-ins for the banks and other rich people. De Masi told the ECB and colleagues that the traditional top-down approach
will only inflate asset bubbles as nobody invests despite ultra-low interest rates . . . We hence need to spend directly into the economy. Funding public investment via EIB would be my preferred option but helicopter money to low income households would definitely work . . .
De Masi is a member of Germany's Die Linke (The Left) party and an earnest advocate for those who have slipped through the EU's rather large cracks. To both the story of De Masi's statements and that of Chairperson Yellen, Positive Money in their triadic article adds the story of the Bank of Britain's intention to allow
non-bank ‘payment service providers’ to hold accounts at the Bank of England, so that they can compete with existing banks to provide current (checking) accounts. This might sound like a minor technical change, but it could lead to a profound shift in the financial system. It will reduce the power of banks and expose them to competition in payment services. The financial technology (fintech) firms can then show that payments accounts can be provided cost-effectively without the power to create money. It will be then much easier to campaign for stopping banks from creating money completely.
Positive Money reports that this is a direct victory for their advocacy.
While we remain skeptical that change will take place through these channels, we're also not surprised that sensible people are arguing for, and minimally sensible bankers are contemplating, stepping outside of the monetarist box.
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