We’ve let banks, rather than the government, create most of our money. But they’ve been creating too much and for the wrong things.

The vast majority of money in circulation is created by commercial banks, through the process of bank lending.
— Money creation in New Zealand,
Reserve Bank Bulletin, January 2023

Banks have a privileged role unique among businesses: we grant them the right to create most of our money—98% in fact. The other 2% is made up of notes and coins. Private banks create money when we take out loans and then charge us interest on the newly-created money.

While they provide an essential financial service it comes at a high price.

In recent years, their social licence has been stretched to breaking point as this privilege has been misused.

• Household debt has ballooned as banks create too much money and pour it into property, forcing buyers to borrow more to compete for increasingly unaffordable houses
• Bank profits have soared as a result, yet branches close and services worsen
• Business lending has stagnated as a share of the economy as banks focus on the mortgage market and unproductive debt
• More of our lives are spent serving banks: we’re now working longer hours and taking many more years to repay this debt mountain

In short, there’s a widening gap between what’s good for banks and what’s good for us — people, communities, economy and sustainability.

It’s left us swimming in debt while the productive economy, where jobs are created, and goods and services are made, is starved of investment.

So what can we do about it?