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Independent Commission on Banking Reports Back…

By On · 67 Comments · In In the News, Independent Commission on Banking

Here’s my update on the ICB report:

NOTE: Despite a 3 hour in-person meeting with ourselves and NEF, the Commission appear to have significantly misunderstood the benefits of full-reserve banking and mis-represented the proposal in their interim report. We’ll discuss this with them before we comment publicly.  UPDATE: We have responded to these inaccuracies here.

About The Author

Ben Dyson (Positive Money)

Ben has spent the last 4 years figuring out what's wrong with the financial system. He now spends his time working on the Positive Money campaign, working with MPs, think tanks, charities, academics and unions to promote a better understanding of the real issue with debt-based money and fractional reserve banking. Ben spends his free-time looking at how Irving Fisher's 100% reserve solution could be implemented in the digital-age UK (see Positive Money's joint submission to the Independent Banking Commission for full details) and intends to regain a social life once the money/banking issue is fixed (2015?).

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  • Ocean

    May i suggest that other PM supporters set up regional PM groups?
    Positive Money Hereford has so far presented 2 successful local talks, with 2 more planned. Yesterday, Positive Money Portsmouth delivered their first presentation (i hear it went well). I am happy to share the text of the talk, powerpoint presentation, video clips, poster/leaflet design etc to anyone who wishes to round up an audience and educate them. The talk etc can be used exactly as it is or adapted to suit your personal style/audience make up. Please email [email protected] if you are interested.

  • Conrad Jones (Cheam)

    @David Moon

    You are correct about what you say, but there is a difference between previous campaigns and this one that is worth being optimistic about; which I believe I heard Ben Dyson refer to in a seminar recently. That difference being the Internet and Alternative Media News Programs.

    The Historical references are important, because – as you say; this type of debasement and financial instability has been seen before.

    “The Roman Empire acquired money by taxation or by finding new sources of wealth, like land. However, it had reached its furthest limits by the time of the second good emperor, Trajan, so land acquisition was no longer an option. As Rome lost territory, it also lost its revenue base.”

    Coin clipping was the Historical equivalent to the Fractional Reserve System.

  • Alex Goodall

    If this…

    “There was little support for the notion of narrow or limited purpose banks, for reasons including the lack of feasibility and the value destruction such a measure might bring. However, some did view fractional reserve banking as a problem, and called for the Bank of England to be the only creator of money in the economy.”

    … is indeed the form of the ICB Report’s dismissal of the proposals from Positive Money, then it calls for a direct response.

    DOES the removal of fractional reserve banking lead to “narrow or limited purpose banks”?

    HOW is the idea of “lack of feasibility” addressed?

    WOULD there be “value destruction”? If so, what “value”, and how much would that matter?

    Having got the notion mentioned in the ICB report, it provides a starting point for challenging the stated assumptions behind its dismissal.

    Alex

  • http://goodworld.lightnet.co.uk Janos Abel

    Wendy said

    MPs would be obliged to listen to the evidence…

    I hope this is true. I not it should be.

  • David Moon

    Here is a list of members of the Treasury select committee which I have copied and pasted from Wikipedia. T. S. C as of 29 November 2010

    Andrew Tyrie MP (Chair) Conservative Chichester
    John Cryer MP Labour Leyton and Wanstead
    Michael Fallon MP Conservative Sevenoaks
    Mark Garnier MP Conservative Wyre Forest
    Stewart Hosie MP Scottish National Party Dundee East
    Andrea Leadsom MP Conservative South Northamptonshire
    Andy Love MP Labour Edmonton
    John Mann MP Labour Bassetlaw
    George Mudie MP Labour Leeds East
    Jesse Norman MP Conservative Hereford and South Herefordshire
    David Ruffley MP Conservative Bury St Edmunds
    John Thurso MP Liberal Democrat Caithness, Sutherland and Easter Ross
    Chuka Umunna MP Labour Streatham

    I suppose anything is worth a try and if they refuse, then it is simply more evidence that MP’s don’t really “work for us” after all (as I strongly suspect!)

  • Guy

    Hi Ben, just taking a quick look at your video. You forgot to mention (in response to the claim by the IBC that banks lend money deposited to them to loan to businesses etc etc) that the majority of the money loaned is not deposited, but ‘created’. (about 2 mins into the video). This is an extremely important point, which should come before speculation vs something use comment. Will continue to watch your video now and come back with further thoughts. Guy

  • Peter Verity

    It took years to abolish slavery, but now we look back and wonder how people tolerated it for so long. One day, people will look back at Fractional Reserve Banking and ask the same question.

    PS. take a look at this blog
    http://www.simondixon.org/
    Simon Dixon is putting out the same message as Positive Money. Any mileage in joining forces with him?

  • Guy

    Hi Ben and all, still taking a look at your video. In the meantime please watch this as it looks like Iceland may be about to abandon FRB. If they are able to do this successfully, this could be your most compelling argument to the politicians.

    http://www.youtube.com/watch?v=_ziWPPMdlqs&feature=player_embedded

  • Guy

    Hi Ben, just finished looking at your summary of the ICB interim report and all I can say is, what a sham! Considering that are are meant to be an independent body set up to look impartially at the way the banking system works, on behalf of the Government and the people of this land, then their efforts so far are nothing short of a disgrace. The comment on p16, ….funds deposited with them to provide loans etc etc…’ is a half truth, as we know that most of the money is created through debt. It looks like they will not be recommending that the banks are split up and there is no mention of abandoning FRB. In summary, I can only reach two conclusions 1) The people that make up the ICB really are stupid or 2) They have already succumbed to the dark forces which control our land and ‘been told’ that no significant changes shall be made. It is looking increasingly likely that the ICB is just another Government sham, set up only to appease the public, and that all the decisions have already been reached behind closed doors. It’s about time the British people took to the streets in the millions, and demanded a proper independent investigation. We will never be truly free until we get these parasites off our backs.

  • Alistair

    Very interesting article here by Liam Halligan, the Sunday Telegraph correspondent, on the ICB report. Although not (yet?) a Money Reformer, he speaks here about an issue on which Money Reformers are often challenged. What if the banks decide to leave the UK because they don’t like our regime?
    Sunday Telegraph, 10-4-11
    http://www.telegraph.co.uk/finance/comment/liamhalligan/8440316/Why-fences-walls-and-other-myths-cannot-save-us-from-bankers-risks.html

    ———

    The banks say that if they are pushed too hard they will leave the UK – undermining our tax base. Two more myths. Lloyds and RBS are currently under state control, so they can’t move. HSBC could theoretically shift its HQ, but would any of the Asian cities it cites actually want it? The bank’s liabilities are the size of the UK’s annual GDP – huge in a British context, but totally unmanageable for a much smaller economy like Hong Kong. Would Beijing ultimately extend HSBC the same implicit support as the UK government? If it could be persuaded, a big “if”, there would be almighty strings attached.

    Many of the UK’s “world-class” universal banks only make big profits because they can borrow so cheaply given the assumption – graphically illustrated in recent years – that taxpayers will save them. Such bail-outs stem, in turn, from their handling of retail deposits and because the scale of their resulting speculative activities is so vast they can effectively threaten to blow up the rest of the economy.

    Ergo, break them up and take away their access to ordinary punters’ cash. Let these “masters of the universe” invest their own and their clients’ money without the comfort of a government safety net – and we’ll see how “world class” they are. And if some of them leave, then so what? Given how much they’ve cost us in bail-outs and business failures in recent years, would the Exchequer really be so much worse off?

    The banking lobby’s favourite myth is that if London imposes full separation unilaterally, that would amount to “commercial suicide”. I don’t think so. By purging the UK banking system of excessive risk, such a move would do a great deal to restore London’s name as a centre of regulatory excellence. It would also help Britain regain some desperately needed fiscal credibility. Who wants to lend to a government that has to bail out the City’s incontinent banks once or twice every decade? ……A few months ago, Mervyn King said that “of all the way of organizing banking, the worst is the one we have today”. He was dead right. Yet the IBC looks determined to keep that destructive system intact, rather than breaking it up.

  • David Moon

    Guy @ April 20, 2011 – 1:07 pm

    I agree with your post wholeheartedly. Also, I think we have to conclude its (2) the “dark forces” at work. These people at the ICB would probably swear black was white and white was black and the moon was made of gorgonzola if they had to!

  • Malcolm Donald

    In my experience 95% of the people do not know where 97% money is actually created in the UK. I asked a good cross section of friends and the general public. I have a friend who works as a programmer in an investment bank and in answering my question stated that banks lend out only money that is deposited with them; a bank teller replied the same.

    Read the following link to find out why we invaded Iraq and are currently bombing Libya:
    http://www.atimes.com/atimes/Middle_East/MD14Ak02.html
    95% of MPs and cabinet ministers would not comprehend what the author of the above article was talking about

  • http://www.positivemoneyhereford.org.uk Ocean

    Great film 100% of MPs and the general public ought to watch….saw it last night. The Economics of Happiness. No mention of FRB but did talk about debt and covered all the other pieces of the puzzle in depth. Well worth a watch. Puts this campaign in a much wider context. Available through Permaculture magazines Green Shopping on-line.

  • Conrad Jones (Cheam)

    @Malcolm Donald

    Very interesting link concerning the economic and Central Banking connections to the Libyan “Humanitarian Intervention”.
    http://www.atimes.com/atimes/Middle_East/MD14Ak02.html

    It appears that Libya wasn’t (isn’t) the oppressive regime we’ve all been lead to believe by the BBC. Rebels creating their own “Central Bank” in March does seem rather strange, especially as Libya already has it’s own Central Bank (100% state owned) creating the Nation’s Money.

    Remembering the fact that The Libyan Government creates it’s own money let’s look at a “non-biased” source of econmic data:

    CIA Factbook:
    Libyan Public Debt:3.3% of GDP (2010 est.)
    3.9% of GDP (2009 est.)
    https://www.cia.gov/library/publications/the-world-factbook/geos/ly.html
    Budget:
    revenues: $42.31 billion
    expenditures: $38.92 billion (2010 est.)

    United Kingdom Public Debt: 76.5% of GDP (2010 est.)
    68.2% of GDP (2009 est.)
    https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html
    Budget:
    revenues: $926.7 billion
    expenditures: $1.154 trillion (2010 est.)

    Notice that the expenditures for Libya are less than their revenues.
    Notice also that their public debt is a lot less than the UK’s (as a percentage of GDP) and is less than it was the previous year.

    Despite free education, cheap gasoline, massive public expenditures, like the US$33 billion GMMR (Great Man-Made River) project, they are not up to their eyeballs in debt. Why? The Oil or does the fact that Libya creates it’s own money also explain why they have a public debt figure that the UK and especially the US secretly envy.

  • Conrad Jones (Cheam)

    Put another way:

    Imagine your a Bank Manager who sees two people applying for a mortgage:
    One is a Libyan who currently has debts mounting up to 3.3% of his salary.

    The other is English and has debts mounting up to 76.5% of his salary.

    Which one would you lend money to (assuming that you couldn’t create the money out of thin air and wanted it back with interest) ?

  • Malcolm Donald

    Of course the Englishman. You are more likely to take his collateral.

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