Newcastle University Business School

Event Item

Banks shouldn’t create money, Governments should

Join us for the latest Little Heresies event, with guest speakers Vincent Richardson and Alan Peyton from North East Positive Money.

Date/Time: Thursday 9 November, 17:30

Venue: Partners' Room 8.10, Newcastle University Business School

“Of all the ways of doing banking the one we have today is the WORST,” Ex Bank of England Governor, Mervyn King 

Most of us think that banks simply act as intermediaries between lenders and borrowers, that is, they take existing money from depositors and lend it on to borrowers. Many people do not know that banks actually create nearly all our money when they make loans. Approximately 97% of all money in circulation is made this way by private banks. The other 3% is made by the state (central bank), the cash (notes and coins) we use daily. This has major negative ramification - high house prices, high public and private debts, inequality, the environment, and democracy, periodic booms and busts, and occasionally financial crises, depressions and even debt deflations, as well as serious consequences for growth, unemployment, investment. 

A better solution would be for the state to create all this money in a far more open and democratic way. 

We have by and large inherited this current banking system, one that serves the few and disadvantages the many. Ex Bank of England Governor, Mervyn King, was even quoted as saying “of all the ways of doing banking the one we have today is the WORST”. One where we have banks not only doing a lot of harm but then having to be bailed out by the taxpayer. This results in nothing of significance changing in the way banks operate, dooming us all to repeated cycles  of  boom/ bust/ bailout with all the attendant negative fallout 

Under this system Governments are also forced to borrow from private sources when they face budget deficits, which only adds to Government borrowing totals/National Debt. Interest then has to be paid to the holders of that debt, usually the wealthier in society. However it is entirely within the prerogative and capability of Governments and central banks to create all the money they need without having to resort to borrowing vast sums of money at interest. 

We need to get off this hamster wheel and Positive Money show us how. 


Alan Peyton and Vince Richardson are both core leaders of the local North East supporters group of Positive Money. They, and many of Positive Money’s supporters have come together in the belief that something has to be done to correct our ailing banking sector. Alan has experience working in Engineering and also has an MBA in Business Analysis and Consultancy and studied basic law regarding bank finance in particular. Vince has a degree in Systems and Management and has worked in both the retail and hotel sector with a keen interest in economics and firsthand experience of the problems caused by the last financial crash of 2008. We both believe in the solutions provided by Positive Money organisation. They are an independent economic think tank set up just after the last financial crash to educate the public and broaden debate on how the private banking sector and state financing(tax and spend) works and how it may be better redesigned to serve society not work against it.