Category Archives: Electronic money

Ole Bjerg is an Associate Professor of Copenhagen Business School. He identifies beautifully the critical aspects of the creation of money:

1. the difference between
   • Paper Money [Cash – about 5% of the money supply] and
   • Electronic Money [Credit – about 95% of the money supply]
2. the negative consequences:
   • instability
     • banks issue money when the economy is booming and hold back otherwise;
   • inequality
     • interest is a ‘tax’ on money
     • with growing inequality based on the level of interest rates
   • concentration of power
     • how much money?
     • at what price?
     • for what purpose?
3. Hence politicians appear to be impotent, as decisions are made in board rooms of banking institutions – outside democratic institutions.
   • the smart solution is an update of what Central Banks do with respect to PAPER money to INCLUDE electronic money;
     • all citizens should have accounts with Central Banks!
   • Commercial banks continue to
     • take deposits and lend it
     • as a LINK between people who save and who borrow.
4. This is a SOVEREIGN system of money creation – reminding citizens to
   • understand the creation of money
   • participate in the political process of deciding WHO creates money.