Media Statement:
The newly formed New Zealand Banking Reform group would like to invite the Governor of the Reserve Bank, Don Brash, to
explain in plain English to the public the nature of the process of money creation.
It hardly takes much effort to see that whoever controls the creation and destruction of money has substantial influence
over monetary conditions. Don Brash knows, as well as many others, economists, politicians and bankers, that effective
control over money creation has passed from the Reserve Bank into the board rooms of registered commercial banks.
Moreover, those banks are required to act in the interests of the (foreign) shareholders.
We believe that the general public should receive a clear explanation, from the Governor himself, of why and how the
money supply has more than doubled over the last ten years.
In September 1989 Reserve Bank statistics tell us that the total money supply (M3) stood at 46.1 billion dollars. By
September 1999 money supply had increased to 99.3 billion dollars. That is an increase of 53.2 billion dollars, 115
percent, or $14,000 dollars per person. Did the economy grow over that ten year period by 115 percent? I don't think so.
The Reserve Banks statistics also tell us that government created currency did not increase by any where near that
amount. In fact, in Sept 1999 the TOTAL amount of currency stood at only 2.1 billion dollars.
If the Reserve Bank is concerned with holding back inflation, concern shared by the government and the public, why do we
not hear about increases in the money supply? Surely increases in money supply have an effect on inflation.
The truth is that 98 percent of our money supply has been created by commercial banks, that they own that money, and
that the interest rate increase announced yesterday has simply increased the rent we pay for using our money.
The New Zealand Banking Reform Group has been formed to act as forum for discussing monetary policy. We welcome
involvement from the financial sector and all interested people.
We advocate a widening of the terms of reference for the up coming government inquiry into monetary policy.
And we invite from Don Brash a public, plain English, explanation for the doubling of our money supply since the Reserve
Bank Act of 1989.
Dr Finlay Thompson, Co-coordinator of NZ Banking Reform.
Ph 021 117 9149
To contact New Zealand Banking Reform:
To join the discussion group send a blank email to.
…or use the following link.
ENDS