New release: Money and Debt: The Public Role of Banks

The Netherlands Scientific Council for Government Policy (WRR) and the international publisher Springer have published: Money and Debt: The Public Role of Banks. This book explains how money creation works and offers a thorough yet very accessible analysis of the functioning of our current financial-monetary system. While we focus on the situation in the Netherlands, it contains insights that should be of interest to policy-makers and researchers in other (EU) countries and at the EU level.

omslag Money and Dept
©WRR

Money and Debt is a translation of a report written in response to a formal request by the Dutch government to investigate the advantages and disadvantages of alternative monetary systems. This request was made after a citizens’ initiative (Ons Geld) had successfully called for a public debate on monetary reform. The book contains several policy recommendations to address the excessive growth of debt and the public dimension of banks, including:

  • We argue that alternative payment options such as Central Bank Digital Currency (CBDC) can contribute to financial stability and safeguard money as a public good;
  • We suggest to take more direct action to reduce the dominance of the systemically important banks, while supporting smaller institutions and newcomers;
  • We propose to level the playing field between equity and debt finance in national tax policies to limit excessive incentives to go into debt;
  • We call on policy-makers to strengthen macroprudential policy frameworks, which specifically target systemic risks, and to better align them with the ECB’s monetary policy;
  • We stress the importance of taking losses in a timely manner after a crisis, as it creates room for recovery;
  • We propose to investigate the viability of a mandatory general recapitalization of banks after a crisis to facilitate a swift recovery;
  • We argue that the public dimension of the banking sector must be better safeguarded, in particular by better incorporating societal interests in banks’ corporate governance policies;
  • We suggest to improve citizens’ ‘exit’ and ‘voice’ options, by providing an alternative payment and saving option and by ensuring that both banks and supervisors pay more attention to citizens’ ideas and expectations.

The book can be downloaded free of charge (as an ebook) or can be ordered as a deluxe hardcover book via the Springer website.

The report’s impact on the Dutch debate

This book has contributed to Dutch debate on reforms to the banking sector, and has for example led to studies on Central Bank Digital Currency by the Dutch central bank (DNB) and by the Dutch Parliament. In its formal response to Parliament the government acknowledged the importance of the report and its analysis and welcomed many of the recommendations. Additionally, Members of Parliament of both the House of Representatives and the Senate discussed the report with the authors, the citizens’ initiative and other financial sector stakeholders.

Springer Book Series: Research for Policy

In this series, we publish internationally relevant studies of the Netherlands Scientific Council for Government Policy. Many of the cross-cutting issues that affect Dutch policymaking, also challenge other Western countries or international bodies. By publishing these studies in this international open access scientific series, we hope that our analyses and insights can contribute to the policy debate in other countries.

More information about the Springer Series can be obtained here.