June 24 is on the agenda in the House of Representatives: ‘Research into digital central bank money’. In other words: everyone gets a bank account with De Nederlandsche Bank (DNB). That is the idea, devised by the DNB itself. You no longer have to go to a commercial bank to store and withdraw your money.
It is about digital money and not about cash in your wallet. It would also mean that this money is safe if your commercial bank goes into crisis. DNB proposes that the amount you deposit with DNB does not exceed between 3,000 and 7,000 euros.
This will be discussed in the House of Representatives on Wednesday. DNB has come up with this in response to proposals from MPs and the social organization ‘Stichting Ons Geld’. This led to initiatives for a ‘public bank’ in 2016: alarmed by the credit crisis, more and more people want the payment account to no longer be managed by commercial banks. This was also apparent from the Radar test panel survey: 81% is for a public bank (‘Staatsbank’).
Personal safe account
The risks have not been remedied with the digital central bank money, as DNB proposes, ‘Ons Geld’ states on their website. The foundation is for a ‘Personal safe account’ with a ‘public custody’. This must then be managed by the Ministry of Finance. The ministry is not allowed to do anything with this money. The consumer can place this account with a bank of his choice.
In December 2018, Member of Parliament Mahir Alkaya (SP) submitted an initiative note in which he proposes a public deposit bank. This proposal will also be discussed in the House on Wednesday. This national payment and savings bank should give a 100 percent guarantee on savings and payments. In this note, Alkaya describes the current situation: everyone now has to pay for the money that is now in the ‘private’ bank and ‘private banks are now taking risks with our savings, by lending or investing, and thus make billions in profits . After setting up a public depository bank, people will find themselves in a position where they do have an alternative. ‘
Deposit guarantee scheme
The cabinet has previously rejected the introduction of an alternative public bank. Because, according to the cabinet, you already have a guarantee of one hundred thousand euros with current banks. If your bank goes wrong, your money up to that amount is secured by the government in the so-called deposit guarantee scheme.
Nevertheless, it is again on the agenda in the House of Representatives on Wednesday: ‘The future of the money system’. The report of the Scientific Council for Government Policy (WRR) is also discussed. In April this year, the Council published a report on this: ‘Money and debt: The public role of banks’. The WRR writes in this that a public bank is not the solution, but believes that the ‘public dimension of banks’ should remain anchored. And also sees that the current ‘excessive debt growth must be tempered’.
Democracy is out of the question
The DNB’s proposal for digital central bank money sees ‘Ons Geld’ as an undermining of democracy. ‘By limiting the scope to digital central bank money, the debate about the money system is nipped in the bud.’ On the website of ‘Ons Geld’, the foundation points to the fact that if DNB will now also take care of citizens’ bank accounts, supervision and implementation will be in one hand. The foundation does not consider this desirable.
Radar has previously made a diptych about how commercial banks create money by making debts.
How is money made?