Monetary reform is any movement or theory that proposes a system of supplying

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: m ...

and financing the economy that is different from the current system. Monetary reformers may advocate any of the following, among other proposals: * A return to the

gold standard A gold standard is a backed currency, monetary system in which the standard economics, economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the ...

(or

silver standard The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. Silver was far more widespread than gold as the monetary standard worldwide, from the Sumerians 3000 BC until 1873. Following t ...

bimetallism Bimetallism, also known as the bimetallic standard, is a monetary standard in which the value of the monetary unit is defined as equivalent to certain quantities of two metals, typically gold and silver, creating a fixed Exchange rate, rate of ...

). * Abolition of central bank support of the banking system during periods of crisis and/or the enforcement of full reserve banking for the privately owned banking system to remove the possibility of bank runs, possibly combined with sovereign money issued and controlled by the government or a

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

under the direction of the government. There is an associated debate within

Austrian School The Austrian school is a Heterodox economics, heterodox Schools of economic thought, school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivat ...

whether free banking or full reserve banking should be advocated but regardless

economists such as

Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School,Ronald Hamowy, ed., 2008, The Encyclopedia of Libertarianism', Cato Institute, Sage, , p. 62: "a leading economist of the Austri ...

support ending central bank bail outs (" ending the Fed"). * The issuance of interest-free

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

by a government-controlled and fully owned

. Such interest-free but repayable loans could be used for public infrastructure and productive private investment. This proposal seeks to avoid debt-free money causing inflation. * The issuance of

social credit Social credit is a distributive philosophy of political economy developed in the 1920s and 1930s by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made t ...

– "debt-free" or "pure" money issued directly from the

Treasury A treasury is either *A government department related to finance and taxation, a finance ministry; in a business context, corporate treasury. *A place or location where treasure, such as currency or precious items are kept. These can be ...

– rather than the sourcing of fresh money from a

in the form of interest-bearing bonds. Maurice Reckitt said the community would issue its own credit, enabling goods to be sold below cost. * The issuance of

demurrage currency Demurrage currency, also known as depreciating money or stamp scrip in its paper money form, is a type of money that is designed to gradually lose purchasing power at a flat constant rate. Unlike traditional money, demurrage is designed to only b ...

, a form of money that is designed to have a deliberately high

velocity of money image:M3 Velocity in the US.png, 300px, Similar chart showing the logged velocity (green) of a broader measure of money M3 that covers M2 plus large institutional deposits. The US no longer publishes official M3 measures, so the chart only runs t ...

. The Freiwirtschaft economist Silvio Gesell theorized that demurrage would prevent inflation, recessions, the creation of interest rates, and artificial scarcity of capital. * The international monetary reform by proposing the development of a world central bank managed jointly by all member countries in the world. The world central bank then issues a real international currency that coexists with the national currency of each member country and can be converted to each other at an exchange rate that follows the fundamentals of each country called "auto-balancing". The international currency is only for crosborder transactions between member countries, while domestic transactions continue to use their respective national currencies.

Common targets for reform

Of all the aspects of

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

, certain topics reoccur as targets for reform:

Reserve requirements

Banks typically make loans to customers by crediting new demand deposits to the account of the customer. This practice, which is known as

fractional reserve banking Fractional-reserve banking is the system of banking in all countries worldwide, under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve, typically lending the remainder to ...

, permits the total supply of credit to exceed the liquid legal reserves of the bank. The amount of this excess is expressed as the " reserve ratio" and is limited by government regulators not to exceed a level which they deem adequate to ensure the ability of banks to meet their payment obligations. Under this system, which is currently practiced throughout the world, the money supply varies with the quantity of legal reserves and the amount of credit issuance by banks. Several major historical examples of financial regulatory reform occurred in the 20th century relating to fractional-reserve banking, made in response to the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

and the many

bank run A bank run or run on the bank occurs when many Client (business), clients withdraw their money from a bank, because they believe Bank failure, the bank may fail in the near future. In other words, it is when, in a fractional-reserve banking sys ...

s following the crash of 1929. These reforms included the creation of

deposit insurance Deposit insurance, deposit protection or deposit guarantee is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance or deposit ...

(such as the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is a State-owned enterprises of the United States, United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was cr ...

) to mitigate against the danger of bank runs. Countries have also implemented legal reserve requirements which impose minimum reserve requirements on banks. Mainstream economists believe that these monetary reforms have made sudden disruptions in the banking system less frequent. Walter Block argued fractional reserve banking inherently artificially lowers real

interest rates An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

and leads to business cycles propagated by excessive capital investment and subsequent contraction. A small number of critics, such as Michael Rowbotham, equate the practice to

counterfeiting A counterfeit is a fake or unauthorized replica of a genuine product, such as money, documents, designer items, or other valuable goods. Counterfeiting generally involves creating an imitation of a genuine item that closely resembles the original ...

, because banks are granted the legal right to issue new loans while charging interest on the money thus created. Rowbotham argues that this concentrates wealth in the banking sector with various pernicious effects.

Money creation by the central bank

Wright Patman John William Wright Patman (August 6, 1893 – March 7, 1976) was an American politician. First elected in 1928, Patman served 24 consecutive terms in the United States House of Representatives for Texas's 1st congressional district from 1929 to ...

objected to governments paying interest for the use of money which the

creates "out of nothing". These critics claim that this system causes economic activity to depend on the actions of privately owned banks, which are motivated by self-interest rather than by any explicit social purpose or obligation.

International organizations and developing nations

Michael Hudson criticised existing global financial institutions such as the

World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...

and

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...

for reinforcing debt dependency. The attempt by weak

Third World The term Third World arose during the Cold War to define countries that remained non-aligned with either NATO or the Warsaw Pact. The United States, Canada, Taiwan, Japan, South Korea, the Southern Cone, NATO, Western European countries and oth ...

governments to service external debt with the sale of valuable hard and soft commodities on world markets is seen by some to be destructive of local cultures, destroying local communities and their environment.

Arguments for reform

Among the arguments for a transition to

full-reserve banking Full-reserve banking (also known as 100% reserve banking, or sovereign money system) is a system of banking where banks do not lend Demand deposit, demand deposits and instead only lend from time deposits. It differs from fractional-reserve bankin ...

or sovereign money are as follows: * Money are created when a loan is made and this money disappear when the loan is paid down. The central banks cannot control the

money supply In macroeconomics, money supply (or money stock) refers to the total volume of money held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation (i ...

when private banks are creating credit money. Credit money can be converted to reserve money in various ways so that there is no practical limit to the amount of credit money that can be created by private banks.Benes, Jaromir and Michael Kumhof (2012). "The Chicago Plan Revisited". IMF Working Paper, no. 202. This increases the risk of

economic crises A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and ma ...

unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is the proportion of people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work du ...

, and bank bailouts or

s. * Less than 6% of the money in circulation in the world is coins and bank notes, the rest originates from bank credit, carrying interest. This interest allows banks to earn rents from the mere fact that money exist. Reformers do not think it fair that the whole society is paying rents to the banks just for having money to circulate.Jackson, A. and Dyson, B. (2012). ''Modernising Money: Why our Monetary System is Broken and how it can be Fixed.'' London: Positive Money. * The total amount of public and private debt in the world is now between two and three times the amount of

broad money In economics, broad money is a measure of the amount of money, or money supply, in a national economy including both highly liquid "narrow money" and less liquid forms. The European Central Bank, the OECD and the Bank of England all have their own ...

in circulation. This is a result of the accumulated compound interest of credit money. This counterintuitive fact makes it virtually impossible to repay all debt. The mathematical consequence is that somebody will have to go bankrupt even if they have done nothing wrong. It seems unfair that somebody will become destitute as a consequence of the money system rather than because of their own reckless behavior. * It is not only individual persons and businesses that go bankrupt as a consequence of the fact that there is more debt than money in circulation. Many states have gone

bankrupt Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the de ...

and some states have done so many times. The debt problem is particularly severe for

developing countries A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...

that have debt in foreign currencies. The

and the

have been promoting loans to resource-rich developing countries for the expressed purpose of promoting economic growth in these countries, yet these loans were denominated in foreign currencies and most of the money were used for paying transnational entrepreneurs without ever entering the local economy. These countries have been forced to sell off national assets in order to service the debt. Also a number of countries in the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

are affected when a large part of the money circulating in the country originates from banks in other member countries. The spiraling, unpayable

national debt A country's gross government debt (also called public debt or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit occ ...

has led to social chaos and even war in some cases. * A major part of all new credit money that is created is spent on changing the ownership of existing assets rather than creating new assets. This process inflates the prices of assets, including real estate, factories, land, and intellectual rights. This makes living unnecessarily costly for everybody. It contributes to growing inequality and it makes the economy unstable because of the creation of asset bubbles. * The exponentially increasing debt in society can only be serviced as long as the rate of economic growth exceeds the interest rate. This creates an imperative for perpetual growth in production and consumption. This leads to

overconsumption Overconsumption describes a situation where consumers overuse their available goods and services to where they can't, or don't want to, replenish or reuse them. In microeconomics, this is the point where the marginal cost of a consumer is greater ...

and overexploitation of resources. The technological progress in labor-saving technologies has not given us more leisure as we expected, because of the necessary growth in consumption. * The unpayable debt leads to

bankruptcies Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

of homeowners and

foreclosure Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has Default (finance), stopped making payments to the lender by forcing the sale of the asset used as the Collateral (finance), coll ...

of their homes. This allows banks to replace their virtual assets in the form of money created 'out of thin air' with physical assets in the form of real estate. In 1968, a court in Minnesota decided that this practice was

unconstitutional In constitutional law, constitutionality is said to be the condition of acting in accordance with an applicable constitution; "Webster On Line" the status of a law, a procedure, or an act's accordance with the laws or set forth in the applic ...

because the process by which the bank had created money from nothing was fraudulent (see First National Bank of Montgomery v. Daly).

Arguments against reform

Among the arguments for keeping the current system of money creation based on the credit theory of money or

are as follows: * Switching to an untested banking system that differs from that of other countries would lead to a situation of extreme uncertainty. Thomas Jordan
"How money is created by the central bank and the banking system"

Swiss National Bank The Swiss National Bank (SNB; ; ; ; ) is the central bank of Switzerland, responsible for the nation's monetary policy and the sole issuer of Swiss franc banknotes. The primary goal of its mandate is to ensure price stability, while taking econ ...

, 16 January 2018 * A reform would make it difficult for the

to implement a

that secures

price stability Price stability is a goal of monetary and fiscal policy aiming to support sustainable rates of economic activity. Policy is set to maintain a very low rate of inflation or deflation. For example, the European Central Bank (ECB) describes price s ...

. * The creation of money free of debt would make it difficult for the central bank to later reduce the

. * The

would quite likely be subjected to political pressures for producing more money for whatever purpose is high on the political agenda. Giving in to such pressures would lead to

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

. * The finance sector would be weakened because its profit is reduced. * A reform would not offer complete protection against

financial crises A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with Bank run#Systemic banki ...

abroad. * A reform would lead to an unhealthy concentration of power at the central bank. Critics doubt that the central bank can determine the required money supply better than the private banks can. * The central bank may have to provide credit to commercial banks and accept the accompanying risk. * A sovereign money system would stimulate the creation of shadow banking and alternative means of payment. * In the traditional banking system, the central bank controls the

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

while the money supply is determined by the market. In a sovereign money system, the central bank controls the money supply while the market controls the interest rate. In the traditional system, the need for investments determines the amount of credit that is issued. In a sovereign money system, the amount of saving determines the investments. This change of influences will generate a new and different system with its own dynamics and possible instabilities. The interest rate may fluctuate as well as the

liquidity Liquidity is a concept in economics involving the convertibility of assets and obligations. It can include: * Market liquidity In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quic ...

. It is not certain that the market will find an equilibrium where the liquidity is sufficient for the needs of the real economy and full employment.

Alternative money systems

Government Control vs Central Bank independence

To regulate credit creation, some countries have created a

currency board In public finance, a currency board is a mechanism by which a monetary authority is required to maintain a fixed exchange rate with a foreign currency by fully backing the commitment with foreign holdings, or reserves. This policy objective requ ...

, or granted independence to their

. The

Reserve Bank of New Zealand The Reserve Bank of New Zealand (RBNZ) () is the central bank of New Zealand. It was established in 1934 and is currently constituted under the ''Reserve Bank of New Zealand Act 2021''. The current acting governor of the Reserve Bank, Christian ...

, the

Reserve Bank of Australia The Reserve Bank of Australia (RBA) is Australia's central bank and banknote issuing authority. It has had this role since 14 January 1960, when the ''Reserve Bank Act 1959'' removed the central banking functions from the Commonwealth Bank. Th ...

, the

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...

, and the

Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the Kingdom of England, English Government's banker and debt manager, and still one ...

are examples where the

is explicitly given the power to set interest rates and conduct monetary policy independent of any direct political interference or direction from the

central government A central government is the government that is a controlling power over a unitary state. Another distinct but sovereign political entity is a federal government, which may have distinct powers at various levels of government, authorized or deleg ...

. This may enable the setting of interest rates to be less susceptible to political interference and thereby assist in combating

(or debasement of the currency) by allowing the

to more effectively restrict the growth of M3. However, given that these policies do not address the more fundamental issues inherent in fractional reserve banking, many suggest that only more radical monetary reform such as government directly taking over central banks such as the China or Swiss models can promote positive economic or social change. Although

s may appear to control inflation, through periodic bank rescues and other means, they may inadvertently be forced to increase the

(and thereby debase the currency) to save the banking system from bankruptcy or collapse during periodic bank runs, thereby inducing

moral hazard In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs associated with that risk, should things go wrong. For example, when a corporation i ...

in the financial system, making the system susceptible to

economic bubble An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

International monetary reform

Theorists such as

Robert Mundell Robert Alexander Mundell (October 24, 1932 – April 4, 2021) was a Canadian economist. He was a professor of economics at Columbia University and the Chinese University of Hong Kong. He received the Nobel Memorial Prize in Economic Sciences i ...

(and more radical thinkers such as James Robertson) see a role for global monetary reform as part of a system of global institutions alongside the

United Nations The United Nations (UN) is the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...

to provide global

ecological Ecology () is the natural science of the relationships among living organisms and their environment. Ecology considers organisms at the individual, population, community, ecosystem, and biosphere levels. Ecology overlaps with the closely re ...

management and move towards

world peace World peace is the concept of an ideal state of peace within and among all people and nations on Earth. Different cultures, religions, philosophies, and organizations have varying concepts on how such a state would come about. Various relig ...

, with

in particular advocating the revived use of gold as a stabilising factor in the international financial system. Henry Liu of the '' Asia Times Online'' argues that monetary reform is an important part of a move towards

post-autistic economics The post-autistic economics movement (), or movement of students for the reform of economics teaching (), is a political movement that criticises neoclassical economics and advocates for pluralism in economics. The movement gained attention afte ...

. While some mainstream economists favour monetary reforms to reduce

and

currency risk A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific environ ...

and to increase

efficiency Efficiency is the often measurable ability to avoid making mistakes or wasting materials, energy, efforts, money, and time while performing a task. In a more general sense, it is the ability to do things well, successfully, and without waste. ...

in the allocation of

financial capital Financial capital (also simply known as capital or equity in finance, accounting and economics) is any Economic resources, economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their prod ...

, the idea of all-encompassing reform for green or peace objectives is typically espoused by those on the

left-wing Left-wing politics describes the range of Ideology#Political ideologies, political ideologies that support and seek to achieve social equality and egalitarianism, often in opposition to social hierarchy either as a whole or of certain social ...

of the subject and those associated with the

anti-globalization movement The anti-globalization movement, or counter-globalization movement, is a social movement critical of economic globalization. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalist m ...

Commodity money

Newt Gingrich Newton Leroy Gingrich (; né McPherson; born June 17, 1943) is an American politician and author who served as the List of speakers of the United States House of Representatives, 50th speaker of the United States House of Representatives from 1 ...

called for a commission on returning to a

hard currency In macroeconomics, hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a reliable and stable store of value. Factors contributing to a currency's ''hard'' status might include the stability and ...

or asset-backed currency, which is often argued to be an antidote to

. This may involve using commodity money such as money backed by the

gold Gold is a chemical element; it has chemical symbol Au (from Latin ) and atomic number 79. In its pure form, it is a brightness, bright, slightly orange-yellow, dense, soft, malleable, and ductile metal. Chemically, gold is a transition metal ...

silver Silver is a chemical element; it has Symbol (chemistry), symbol Ag () and atomic number 47. A soft, whitish-gray, lustrous transition metal, it exhibits the highest electrical conductivity, thermal conductivity, and reflectivity of any metal. ...

or both, commodities which supporters argue possess unique properties: their extraordinary

malleability Ductility refers to the ability of a material to sustain significant plastic Deformation (engineering), deformation before fracture. Plastic deformation is the permanent distortion of a material under applied stress, as opposed to elastic def ...

, their strong resistance to

forgery Forgery is a white-collar crime that generally consists of the false making or material alteration of a legal instrument with the specific mens rea, intent to wikt:defraud#English, defraud. Tampering with a certain legal instrument may be fo ...

, their character as stable and impervious to decay, and their inherently limited supply.

Social credit and the provision of debt-free money directly from government

Still other radical reform proposals emphasise monetary, tax and capital budget reform which empowers government to direct the economy toward sustainable solutions which are not possible if government spending can only be financed with more government debt from the private banking system. In particular, a number of monetary reformers, such as Michael Rowbotham, Stephen Zarlenga and Ellen Brown, support the restriction or banning of fractional-reserve banking (characterizing it as an illegitimate banking practice akin to

embezzlement Embezzlement (from Anglo-Norman, from Old French ''besillier'' ("to torment, etc."), of unknown origin) is a type of financial crime, usually involving theft of money from a business or employer. It often involves a trusted individual taking ...

) and advocate the replacement of fractional-reserve banking with government-issued debt-free

fiat currency Fiat money is a type of government-issued currency that is not backed by a precious metal, such as gold or silver, nor by any other tangible asset or commodity. Fiat currency is typically designated by the issuing government to be legal tender, ...

issued directly from the

rather than from the quasi-government Federal Reserve. Austrian commentator Gary North has sharply criticized these views in his writings. Alternatively, some monetary reformers such as those in the

movement, support the issuance of repayable interest-free credit from a government-owned central bank to fund infrastructure and sustainable social projects. This social credit movement flourished briefly in the early 20th century, but then became marginalized. In Canada, it was an important political movement that ruled Alberta through nine legislatures between

1935 Events January * January 7 – Italian premier Benito Mussolini and French Foreign Minister Pierre Laval conclude an agreement, in which each power agrees not to oppose the other's colonial claims. * January 12 – Amelia Earhart ...

and 1971, and also won many seats in

Québec Quebec is Canada's largest province by area. Located in Central Canada, the province shares borders with the provinces of Ontario to the west, Newfoundland and Labrador to the northeast, New Brunswick to the southeast and a coastal border ...

. It died out in the 1980s. Both these groups (those who advocate the replacement of fractional-reserve banking with debt-free government-issued fiat, and those who support the issuance of repayable interest-free credit from a government-owned

) see the provision of interest-free money as a way of freeing the working populace from the bonds of "

debt slavery Debt bondage, also known as debt slavery, bonded labour, or peonage, is the pledge of a person's services as security for the repayment for a debt or other obligation. Where the terms of the repayment are not clearly or reasonably stated, or whe ...

" and facilitating a transformation of the economy away from environmentally damaging

consumerism Consumerism is a socio-cultural and economic phenomenon that is typical of industrialized societies. It is characterized by the continuous acquisition of goods and services in ever-increasing quantities. In contemporary consumer society, the ...

and towards sustainable economic policies and environment-friendly business practices.

Examples of government issued debt-free money

Some governments have experimented in the past with debt-free government-created money independent of a bank. The American Colonies used the " Colonial Scrip" system prior to the

Revolution In political science, a revolution (, 'a turn around') is a rapid, fundamental transformation of a society's class, state, ethnic or religious structures. According to sociologist Jack Goldstone, all revolutions contain "a common set of elements ...

, much to the praise of

Benjamin Franklin Benjamin Franklin (April 17, 1790) was an American polymath: a writer, scientist, inventor, statesman, diplomat, printer, publisher and Political philosophy, political philosopher.#britannica, Encyclopædia Britannica, Wood, 2021 Among the m ...

. The paper money of Pennsylvania maintained its value for forty years.

Abraham Lincoln Abraham Lincoln (February 12, 1809 – April 15, 1865) was the 16th president of the United States, serving from 1861 until Assassination of Abraham Lincoln, his assassination in 1865. He led the United States through the American Civil War ...

used interest-free money created by the government to help the Union win the

American Civil War The American Civil War (April 12, 1861May 26, 1865; also known by Names of the American Civil War, other names) was a civil war in the United States between the Union (American Civil War), Union ("the North") and the Confederate States of A ...

. Since greenbacks were not limited by gold, they fueled wartime prosperity among farmers and industrial growth.

Free banking

Kevin Dowd favours permitting competing banks to issue private banknotes whilst also eliminating the central bank's role as

lender of last resort In public finance, a lender of last resort (LOLR) is a financial entity, generally a central bank, that acts as the provider of liquidity to a financial institution which finds itself unable to obtain sufficient liquidity in the interbank ...

. He describes a gold standard as a "natural choice." Digital means are also now possible to allow trading in hard currencies such as gold, and some believe a new free market will emerge in money production and distribution, as the

internet The Internet (or internet) is the Global network, global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a internetworking, network of networks ...

allows renewed decentralisation and competition in this area, eroding the

's and bankers' old

monopoly A monopoly (from Greek language, Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic Competition (economics), competition to produce ...

control of the means of exchange.

Local barter, local currency

Paul Hawken suggests wholesale reform of money and currency, based on ideas from green economics or Natural Capitalism, would be beneficial. These include the ideas of soft currency,

barter In trade, barter (derived from ''bareter'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods ...

and the local

service economy Service economy can refer to one or both of two recent economic developments: * The increased importance of the service sector in industrialized economies. The current list of Fortune 500 companies contains more service companies and fewer m ...

Local currency In economics, a local currency is a currency that can be spent in a particular geographical locality at participating organisations. A regional currency is a form of local currency encompassing a larger geographical area, while a community curren ...

systems can operate within small communities, outside of government systems, and use specially printed notes or tokens called

scrip A scrip (or ''wikt:chit#Etymology 3, chit'' in India) is any substitute for legal tender. It is often a form of credit (finance), credit. Scrips have been created and used for a variety of reasons, including exploitative payment of employees un ...

s for exchange.

Barter In trade, barter (derived from ''bareter'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods ...

takes this further by swapping goods and services directly; a compromise being the Local Exchange Trading Systems (LETS) scheme: a formalised system of community-based economics that records members' mutual credit in a central location.