Opinion Former Article

ESRC: Parliament's power has shifted to the banks

A recent report by Positive Money into the UK's banking system has highlighted that the banks have more spending power than the Government. But, unlike the Government, the banking system is not accountable to voters and its power is concentrated in the hands of a few people. Five banks, with branches on most high streets, hold 85 per cent of the UK's money and they have less than 80 board members - individuals whose decisions have the power to shape the economy.

Positive Money will be hosting a debate as part of an Economic and Social Research Council (ESRC) Festival of Social Science. Professor Mary Mellor, from Northumbria University, author of 'The Future of Money' is speaking at the event. Her research focuses on the financial crisis, money systems and financial exclusion.

Commenting on the power shift that has occurred, Professor Mellor says, "The Government has lost control of its money supply, leading to the ludicrous situation where they borrow from the banks and money markets – to rescue the banks and money markets. Historically, states were the principal source of money, when money was mainly cash and it didn't automatically incur debt. We've now moved to debt-based money issued by the banks. This has come about as a result of the dominance of electronic money issued only through banks and only as debt."

She points out that governments have only recently started creating money electronically as 'quantitative easing' via the central banks. However, with these central banks being only 'linked' to the banking sector (so-called independence) public control over money supply has been lost, and many governments are facing 'deficit hysteria' and austerity.

As the events of recent years have shown, the banking sector can have a serious negative impact on people's lives. Professor Mellor believes that leaving banks with such a large and unaccountable degree of power is no more likely to work in the best interests of society or democracy in the future, than it has in the past.

"Where money comes from and how it's initially spent is not discussed in general circles and most MPs, economists and people in the media don't really understand it either," says Gary Brooks, a campaigner for Positive Money who has arranged the event. "The recent financial crisis, the recession, high levels of private debt, government cuts and austerity has impacted all of us in some way. We need a public debate about how money is created and spent as this is the root cause of so many financial problems," he concludes.

For further information contact:

Gary Brooks

Email: garyrbrooks@yahoo.com

Telephone: 0191 534 1477

Professor Mary Mellor

Email: m.mellor@northumbria.ac.uk

ESRC Press Office:

Sarah.Nichols
Email: sarah.nichols@esrc.ac.uk
Telephone 01793 413122
Jeanine Woolley
Email: jeanine.woolley@esrc.ac.uk
Telephone 01793 413119
Notes for editors

Event: Where does money come from
Organiser: Positive Money
Date: 8 November 2012, 17.30 - 21.00
Venue: Newcastle Unitarian Church Hall, Newcastle, NE1 8XG
Audience: General audience
For more information: Where does money come from
The report 'Banking vs Democracy: The Democratic Deficit in Banking', was published in February 2012 by Positive Money. The report was written by Andrew Jackson and Ben Dyson of Positive Money and consisted mainly of a literature review and an evaluation of how modern banking is carried out.
Positive Money is a not-for-profit research and campaign group. It works to raise awareness of the connections between current monetary and banking system and some of the biggest social, economic and environmental challenges that are faced today.
Mary Mellor is Emeritus Professor in the Department of Social Science at Northumbria University. She has published widely on the financial crisis, money systems and alternative economics. Her most recent book is The Future of Money: From Financial Crisis to Public Resource (Pluto Press 2010).
The Festival of Social Science is run by the Economic and Social Research Council and takes place from 3-10 November 2012. With events from some of the country's leading social scientists, the Festival celebrates the very best of British social science research and how it influences our social, economic and political lives - both now and in the future. This year’s Festival of Social Science has over 180 creative and exciting events across the UK to encourage businesses, charities, government agencies, schools and college students to discuss, discover and debate topical social science issues. Press releases detailing some of the varied events and a full list of the programme are available at the Festival website. You can now follow updates from the Festival on twitter using #esrcfestival.
The Economic and Social Research Council (ESRC) is the UK's largest organisation for funding research on economic and social issues. It supports independent, high quality research which has an impact on business, the public sector and the third sector. The ESRC’s total budget for 2012/13 is £205 million. At any one time the ESRC supports over 4,000 researchers and postgraduate students in academic institutions and independent research institutes. More at www.esrc.ac.uk

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