productivity and growth, it has a negative debt, financial crisis- and ecological crisisinducing function for many other loans, and may have no place in an economy that seeks to be economically and ecologically stable without economic growth. The cooperative, member-owned JAK Bank in Sweden seeks to achieve a fair, sustainable economy by enabling people to borrow without interest based on stored savings. In 2016 they had 36,000 members, $277 million in assets, and a 92% bank sustainability rating. Their goal is a sustainable economy based on a sustainable return on real capital, using natural resources within the limits set by the ecology without dumping long-term costs on future generations.
The use of central bank-created money for ecological purposes Central banks create money. They don’t like to admit it, since they fear the public would not understand, so instead they use phrases such as increasing the credit supply, injecting additional liquidity, monetising the deficit, open market operations, buying securities, expansionary monetary policy, expanding the balance sheet, and quantitative easing (QE).
Central bankers like to emphasise the importance of independence, but they are totally wedded to the health of the overall economy and often receive guidance from their governments. When central banks created money to bail out the banks in 2008 they did so by purchasing toxic and effectively worthless stocks and bonds off the banks, giving the banks a massive injection of liquidity (cash) which the banks leveraged to pour credit into the housing market, creating rapid inflation and the affordable housing crisis.
Had governments been on their social and ecological toes they could have created affordable housing bonds and climate int The bonds, given them to appropriate agencies, and used QE to buy the bonds off the agencies. Even Adair Turner – a past chair of Britain’s Financial Services Authority, senior fellow at the Institute for New Economic Thinking and chairman of the International Financial Stability Board’s major policy committee – has argued that governments should use central bank money creation to meet their fiscal needs.
“Central banks create money. They don’t like to admit it, since they fear the public would not understand.”
The World Future Council’s chief economist, Matthias Kroll, has suggested that the world’s central banks could tackle the climate crisis together by creating $300 billion a year in the form of climate bonds and using them to leverage private investments of $2 trillion a year for the transition to renewable energy and other climate solutions. Might this not cause inflation? If global annual economic growth is 4% and inflation is 2%, the world needs a 6% increase in the money supply each year, totaling $4.8 trillion – sixteen times larger than the proposed $300 billion in climate bonds. In Europe this approach is known as QE for people, and there is a social movement trying to make it happen, supported by 115 economists, 20 organisations, thousands of people, and indirectly by the European Parliament, which passed a motion in 2016 acknowledging that conventional QE was failing.
Central banks have mandates. The Bank of Canada has a single mandate: to keep prices stable in a strong financial system. The