Our campaign to reform the debt-based money system continues

Positive Money NZ is committed to campaigning for a better monetary system, one that works for the economy and all of the people, not just a few.


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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.
While the Reserve Bank creates our notes and coins, this forms less than 3% of our money supply. The rest nowadays is electronic money for EFTPOS, internet banking and so on and is created by private banks when people take out loans.

This electronic money is created out of thin air (ʻex nihilo’) — merely by making accounting entries in the books of banks. The banks then lend it to you and me and charge us interest on money they never had. Nice business.

It means banks have an incentive to ʻsell’ as much debt as they can — more than the economy actually needs. This leads to excessive debt, overpriced housing, stressed families and an economy that isn’t working for many people.

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

After decades of letting banks inflate the money supply, the problems of this system have caught up with us.

Unaffordable housing

Banks pour most of their credit into the housing market and since they were freed up following the 1989 Reserve Bank Act, they’ve been able to lend much more than we needed, inflating land prices. Years of this — often with encouragement from the Reserve Bank  — have now made houses unaffordable for ordinary working families and taken a bigger share of household budgets.

Bank profits instead of public goods

The Reserve Bank earns about $150 million a year from ‘seigniorage’ — that’s the income from issuing new notes and coins. But physical currency is less than three per cent of the money in circulation. If the electronic money was included, the seigniorage could go towards our run-down public infrastructure and services, instead of foreign banks’ profits.

A mountain of private debt

It would take an entire year’s output from the New Zealand economy to repay the debt borrowed to buy our own houses. A generation ago, it was a quarter of that — before banks were left to stuff households with as much credit as they could. That unproductive debt now sucks billions out of the economy, money that could instead support local enterprises and decent wages.

A major Government investigation into housing affordability reached this conclusion:

“With deregulation in the early 1990s improving banks’ access to an under-leveraged household sector and perceptions that mortgage lending is ‘as safe as houses’, the expansion of the banking sector into the home lending market was a natural development. In large part, this explains the ready availability of money for housing, which, in turn, most likely contributed to surges in house prices in the mid-1990s and mid-2000s.”

NZ Productivity Commission: Housing affordability inquiry, March 2012, p53 (emphasis ours)

The Sovereign Money Solution

It’s time to take back control of our money

The ‘Sovereign Money’ solution proposed by Positive Money would have the Reserve Bank issue our electronic money as well as our notes and coins. This electronic money is a Central Bank Digital Currency (CBDC). It can be issued debt-free and spent on infrastructure projects such as hospitals, roads and transport, or new schools, rather than being pumped into an overheated property market.

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About Positive Money NZ

Help us to change this flawed system. Positive Money NZ is an independent, non-profit group advocating for monetary reform in New Zealand. Our patron is Bryan Gould and we are part of a global movement of organisations campaigning to change the way money is created so that money serves society.

We’re part of an international movement for monetary reform.

Four reasons to change

It’s fair

The power to create money is given by government. It should be used for the public good, not just private profit. It could build schools and hospitals, improve public services, help tackle the climate crisis, or lower public and household debt.

It’s responsible

The amount of new money created, and where it ends up, is too important to leave in the hands of private banks. The data now clearly shows they have misused this power, enriching a few at the expense of our economy and wellbeing. 

It’s efficient

New money should be spent into the economy to create jobs, infrastructure, better public services, and support productive activities. Instead, today it is lent into the economy which inflates house prices, buries us in unproductive debt, and drains money out of the economy as this debt is repaid.

It’s time

The changes that created our problems with excessive private debt and bloated, too-big-to-fail banks, have also created an unequal, stressed, debt-laden reality for most Kiwis. It’s time to stop it before the damage is beyond repair.

This isn’t new. We’ve been here before.

Foreign bankers used to control New Zealand’s money … until 1934 when we took back control.

Believe it or not, before 1934 New Zealand’s monetary policy was directed from the United Kingdom and our money was issued by various private banks.

In 1934, in the midst of the Great Depression, the Reserve Bank of New Zealand was created through an act of Parliament. This brought control of money and monetary policy to New Zealand and gave the Reserve Bank the monopoly to issue all New Zealand currency.

Initially partly privately owned, the Bank was nationalised in 1935 by a newly elected Labour government which also gave it authority to underwrite loans to the government.

The government used this power to support its massive State house-building programme and provide loans for industry development. This began the ‘cradle to grave’ welfare state, providing health care, education, a universal pension, and ushered in our most prosperous period.

The private banks are back in control of the money-printing machine. It’s time again to take back control.

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Help us to achieve real change and make sure that banks and the monetary system work for the public good not just for private profits.

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